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AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), made as
of the 10th day of January, 2001, by and among AMERICAN NATIONAL BANK
and TRUST COMPANY OF CHICAGO ("Bank"), a national banking association
with its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, National Securities Corporation, a Washington
corporation with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Borrower") and Olympic Cascade
Financial Corporation, a Delaware corporation ("Guarantor") for the
limited purposes as set forth herein, has reference to the following
facts and circumstances:
A. Pursuant to Borrower's request, Bank heretofore, now and from
time to time hereafter, has and/or may loan or advance monies, extend
credit, and/or extend other financial accommodations to or for the
benefit of Borrower.
B. To secure repayment of the same and all of "Borrower's
Liabilities" (as hereinafter defined), Borrower wishes to provide Bank
with a security interest in and/or collateral assignment of Borrower's
assets as set forth herein.
NOW, THEREFORE, in consideration of terms and conditions set
forth herein and of any loans or extensions of credit heretofore, now
or hereafter made to or for the benefit of Borrower the parties hereto
agree as follows:
1. DEFINITIONS AND TERMS
A. When used herein, the words, terms and/or phrases set forth
below shall have the following meanings:
B. "ACCOUNTS": means all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are
not evidenced by instruments or chattel paper, and whether or not they
have been earned by performance.
C. "ACQUISITION": means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by
which the Borrower or Guarantor (a) acquires any going business or all
or substantially all of the assets of any firm, corporation or limited
liability company, or division thereof, whether through purchase of
assets, merger or otherwise or (b) directly or indirectly acquires (in
one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the
election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage
or voting
power) of the outstanding ownership interests of a partnership or
limited liability company.
D. "ADVISERS ACT": means the Investment Advisers Act of 1940, as
amended from time to time.
E. "AFFILIATE": means, Guarantor, WestAmerica and any other
Person directly or indirectly, owned or
controlled by or under common control with Guarantor or Borrower.
F. "AMEX": means the American Stock Exchange and any successor
thereto.
G. "AUTHORIZED OFFICER": means any of the chief executive officer
or president of Borrower or chief financial officer or controller of
Borrower or Guarantor, acting singly.
H. "BORROWER'S LIABILITIES": means all obligations and
liabilities of Borrower to Bank under this Agreement and the other
Loan Documents (including without limitation all debts, claims,
indebtedness and reasonable attorneys' fees and expenses as provided
for in Paragraph 9.13) whether primary, secondary, direct, contingent,
fixed or otherwise, including, without limitation, Rate Hedging
Obligations and Letter of Credit Obligations (as defined in
subsections QQ and CC, respectively, herein) of Borrower heretofore,
now and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising,
whether under this Agreement or the other Loan Documents or by
operation of law or otherwise.
I. "BORROWING NOTICE": Means written notice to Bank substantially
in the form of EXHIBIT A attached hereto.
J. "CEA": means the Commodities Exchange Act, as amended from
time to time.
K. "CFTC": means the Commodities Future Trading Commission and
any successor.
L. "CHARGES": means all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including without limitation the
Pension Benefit Guaranty Corporation) taxes, levies, assessments,
charges, liens, claims or encumbrances upon and/or relating to the
"Collateral" (as hereinafter defined), Borrower's Liabilities,
Borrower's business, Borrower's ownership and/or use of any of its
assets, and/or Borrower's income and/or gross receipts.
M. "COLLATERAL": shall have the meaning set forth in PARAGRAPH
3.2.
N. "CONTINGENT OBLIGATION": means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of,
or otherwise becomes or is contingently liable upon, the obligation or
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liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss,
including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person
as general partner of a partnership with respect to the liabilities of
the partnership.
O. "CONTROL AGREEMENT": means a control agreement executed by
Borrower, Bank and a securities intermediary of Borrower and delivered
to Bank, for the benefit of Bank, as it may be amended, supplemented
or otherwise modified from time to time.
P. "DEFAULT": means the occurrence of any event which, with the
giving of notice or lapse of time, or both, would constitute an Event
of Default.
Q. "EVENT OF DEFAULT": means the occurrences set forth in Section
8.1, after the expiration of any cure or grace period set forth
therein.
R. "EXCHANGE ACT": means the Securities Exchange Act of 1934, as
amended from time to time.
S. "FISCAL QUARTER": means one of the four three-month accounting
periods comprising a Fiscal Year.
T. "FISCAL YEAR": means the twelve-month accounting period ending
on the last Friday in September of each
year.
U. "FOCUS REPORT": means the Financial and Operational Combined
Uniform Single Report required to be filed on a monthly or quarterly
basis, as the case may be, with the NASD, or any report that is
required in lieu of such report.
V. "GOVERNMENTAL AUTHORITY": means any government (foreign or
domestic) or any state or other political subdivision thereof or any
governmental body, agency, authority, department or commission
(including without limitation any taxing authority or political
subdivision) or any instrumentality or officer thereof (including
without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other
entity directly or indirectly owned or controlled by or subject to the
control of any of the foregoing.
W. "GUARANTOR": means Olympic Cascade Financial Corporation, a
Delaware corporation, and its successors and assigns.
X. "GUARANTY": means the Guaranty, dated as of the date hereof,
by Guarantor in favor of the Bank, as amended from time to time.
Y. "INDEBTEDNESS": means (i) indebtedness for borrowed money or
for the deferred purchase price of property or services; (ii)
obligations as lessee under leases which shall have been or should be,
in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) or (ii) above; and (iv)
liabilities with respect to unfunded vested benefits under plans
covered by Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and in effect from time to time.
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Z. "INVESTMENT": of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made
in the ordinary course of business), extension of credit (other than
accounts receivable arising in the ordinary course of business on
terms customary in the trade) or contribution of capital by such
Person; stocks, bonds, mutual funds, partnership interests, notes,
debentures or other securities owned by such Person; any deposit
accounts and certificate of deposit owned by such Person; and
structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
AA. "INVESTMENT COMPANY ACT": means the Investment Company Act of
1940, as amended from time to time.
BB. "LETTERS OF CREDIT": means any and all commercial or standby
Letters of Credit issued by Bank for the
account of Borrower, Guarantor or WestAmerica.
CC. "LETTERS OF CREDIT OBLIGATIONS": means all outstanding
obligations (including all duty, freight, taxes, costs, insurance and
any other charges and expenses) incurred by Bank, whether direct or
indirect, contingent or otherwise, due or not due, in connection with
Letters of Credit.
DD. "LIEN": means any security interest, lien (statutory or
other), mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever.
EE. "LOANS": means, collectively, all Revolving Loans as defined
in PARAGRAPH 2.6.
FF. "LOAN DOCUMENTS": means this Agreement, any notes issued
pursuant to SECTION 2.1, the Guaranty, and any
Other Agreements executed by Borrower or Guarantor in favor of Bank.
GG. "MSRB": means the Municipal Securities Rulemaking Board and
any successor entity.
HH. "MARGIN STOCK": shall have the meaning assigned to that term
under Regulation U.
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II. "MATERIAL ADVERSE EFFECT": means a material adverse effect on
(a) the business, property, condition (financial or otherwise) or
results of operations of Borrower or Guarantor, or (b) the ability of
Borrower or Guarantor to perform its obligations under the Loan
Documents, or (c) the validity or enforceability of any of the Loan
Documents of the rights or remedies of the Bank thereunder.
JJ. "MAXIMUM REVOLVING FACILITY": means $5,000,000, the maximum
amount Bank has agreed to consider as a ceiling on the outstanding
principal balance of Revolving Loans and Letters of Credit to be made
and issued by Bank pursuant to this Agreement.
KK. "NSC EXCESS NET CAPITAL": means, at any time, "excess net
capital" computed in accordance with Rule 15c3-1 and the alternative
standard method set forth therein.
LL. "OBLIGOR": any Person who is and/or may become obligated to
Borrower or any Debtor under or on account of "Accounts."
MM. "NASD": means the National Association of Securities Dealers,
Inc., and any successor entity.
NN. "OTHER AGREEMENTS": means all agreements, instruments and
documents, including without limitation, guaranties, mortgages, deeds
of trust, notes, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, subordination
agreements, financing statements and all other written matter
heretofore, now and/or from time to time hereafter executed by and/or
on behalf of Borrower, Guarantor or WestAmerica.
OO. "PERSONS": means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution,
entity, party or government (whether national, federal, state, county,
city, municipal or otherwise, including without limitation, any
instrumentality, division, agency, body or department thereof.
PP. "PROPERTY": of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.
QQ. "RATE HEDGING OBLIGATIONS": means any and all obligations of
Borrower, whether absolute or contingent and howsoever and whenever
created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements designed to protect Borrower from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to: interest rate swap
agreements, dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest
rate cap, floor or collar agreements, forward rate currency agreements
or agreements relating to interest rate options, puts and warrants,
and (ii) any and all agreements relating to cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
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RR. "REGULATION T": means Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and shall
include any successor or other regulation or official interpretation
of such Board of Governors relating to the extension of credit by
securities brokers and dealers for the purpose of purchasing or
carrying margin stocks applicable to such Persons.
SS. "REGULATION U": means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said Board
of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to such
Persons.
TT. "REGULATION X": means Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and shall
include any successor or other regulation or official interpretation
of said Board of Governors relating to the extension of credit by the
specified lenders for the purpose of purchasing or carrying margin
stocks applicable to such Persons.
UU. "RULE 15C3-1": means Rule 15c3-1 of the General Rules and
Regulations governing net capital requirements for brokers or dealers
as promulgated by the Commission under the Exchange Act, as such rule
may be amended from time to time, or any rule or regulation of the
Commission which replaces Rule 15c3-1.
VV. "RULE 15C3-3": means Rule 15c3-3 of the General Rules and
Regulations governing customer protection with respect to reserves and
custody of securities as promulgated by the Commission under the
Exchange Act, as such rule may be amended from time to time, or any
rule or regulation of the Commission which replaces Rule 15c3-3.
WW. "SIPA": means the Security Investor Protection Act of 1970,
as amended from time to time.
XX. "SIPC": means the Securities Investor Protection Corporation
or any successor entity.
YY. "SECTION": means a numbered section of this Agreement, unless
another document is specifically referenced.
ZZ. "SELF-REGULATORY ORGANIZATION": has the meaning assigned to
such term in Section 3(a)(26) of the Exchange Act.
AAA. "SUBSIDIARY": of a Person means (a) any corporation more
than 50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries, or (b) any
partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
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BBB. "WEEKLY CUSTOMER CREDIT/DEBIT CALCULATION REPORTS": means a
report containing such information as set
forth in EXHIBIT B attached hereto and incorporated herein.
CCC. "WESTAMERICA": means WestAmerica Investment Group, a
California corporation.
DDD. "WESTAMERICA EXCESS NET CAPITAL": means, at any time,
"excess net capital" computed in accordance with Rule 15c3-1 and the
"basic" net capital computation method set forth therein.
1.2 Except as otherwise defined in this Agreement or the Other
Agreements, all words, terms and/or phrases used herein and therein
shall be defined by the applicable definition therefor (if any) in the
Illinois Uniform Commercial Code.
2. LOANS
2.1 Loans made by Bank to Borrower pursuant to this Agreement
shall be evidenced by notes or other instruments issued or made by
Borrower to Bank. Except as otherwise provided in this Agreement or in
any notes executed and delivered by Borrower to Bank in connection
herewith, the principal portion of Borrower's Liabilities shall be
payable by Borrower to Bank on the maturity date(s) described in any
such note(s) or other instruments evidencing Borrower's Liabilities
(as the same may be amended, renewed or replaced) and all reasonable
costs, fees and expenses payable hereunder or under the Other
Agreements, shall be payable by Borrower to the Bank on demand, in
either case at Bank's principal place of business or such other place
as Bank shall specify in writing to Borrower.
2.2 From time to time, Borrower, Guarantor or WestAmerica may
request that Bank issue Letters of Credit on their behalf. Bank shall
have no obligation to issue such Letters of Credit, each of which may
be issued by Bank in its sole discretion in each instance. Any Letter
of Credit so issued shall be subject to separate application and
reimbursement documentation in form and substance satisfactory to
Bank. Any such Letter of Credit shall constitute usage of the Maximum
Revolving Facility under the terms of this Agreement.
2.3 All of Borrower's Liabilities shall constitute one obligation
secured by Bank's security interest in the Collateral and by all other
security interests, liens, claims and encumbrances heretofore, now
and/or from time to time hereafter granted by Borrower to Bank.
2.4 Each loan made by Bank to Borrower pursuant to this Agreement
or the Other Agreements shall constitute an automatic warranty and
representation by Borrower to Bank that there does not then exist a
Default or an Event of Default.
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2.5 This Agreement shall be in effect until all of Borrower's Liabilities
have been paid in full and any and all commitments of Bank to make
loans have terminated.
2.6 Subject to Section 7 and the other terms and provisions hereof, Bank
shall advance to Borrower on a revolving credit basis (the "Revolving
Loans") in an amount not to exceed the Maximum Revolving Facility.
2.7 Notwithstanding anything contained in this Agreement or the Other
Agreements to the contrary, the principal portion of Borrower's
Liabilities (including, without limitation, Letter of Credit
Obligations) outstanding at any one time shall not exceed the Maximum
Revolving Facility. In the event the principal portion of Borrower's
Liabilities exceeds the Maximum Revolving Facility, Borrower shall
immediately repay the Borrower Liabilities in the amount necessary to
comply with this Section 2.7
2.8 Bank's commitment to loan shall expire on the earlier of: (i) the date
on which Borrower's Liabilities mature under the terms of any note
given by Borrower to Bank, or (ii) the occurrence of an Event of
Default pursuant to Section 8 hereof.
3. COLLATERAL: GENERAL TERMS
3.1 To secure the prompt payment to Bank of Borrower's
Liabilities and the prompt, full and faithful performance by Borrower
of all of the provisions to be kept, observed or performed by Borrower
under this Agreement and/or the Other Agreements, Borrower grants to
Bank a security interest in and to, and collaterally assigns to Bank,
all of Borrower's property, wherever located, whether now or hereafter
existing, owned, licensed, leased (to the extent of Borrower's
leasehold interest therein), consigned (to the extent of Borrower's
ownership therein), arising and/or acquired, including without
limitation all of Borrower's right, title and interest in all: (a)
Accounts, chattel paper, tax refunds, contract rights, leases,
leasehold interests, letters of credit, instruments, documents,
documents of title, patents, copyrights, trademarks, tradenames,
licenses, goodwill, beneficial interests and general intangibles; (b)
goods whose sale, lease or other disposition by Borrower have given
rise to Accounts and have been returned to or repossessed or stopped
in transit by Borrower; (c) investment property, certificated and
uncertificated securities, securities accounts, securities
entitlements, commodities accounts and commodities contracts; (d)
goods, including without limitation all its consumer goods, machinery,
equipment, farm products, fixtures and inventory; (e) liens,
guaranties and other rights and privileges pertaining to any of the
Collateral; (f) monies, reserves, deposits, deposit accounts and
interest or dividends thereon, cash or cash equivalents; (g) property
now or at any time or times hereafter in the possession, or under the
control of Bank or its bailee; (h) accessions to the foregoing, all
litigation proceeds pertaining to the foregoing and all substitutions,
renewals, improvements and replacements of and additions to the
foregoing; and (i) books, records and computer records in any way
relating to the Collateral herein described. Notwithstanding anything
herein to the contrary, Collateral shall not include (x) items that
are prohibited from being pledged under federal statutes or
regulations, and (y) assets not permitted to be pledged under the
SEC's Customer Protection Rule 15c3-3.
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3.2 All of the aforesaid property and products and proceeds of
the foregoing in PARAGRAPH 3.1 above, including without limitation,
proceeds of insurance policies insuring the foregoing are herein
individually and collectively called the "Collateral". The terms used
herein to identify the Collateral shall have the same meaning as are
assigned to such terms as of the date hereof in the Illinois Uniform
Commercial Code.
3.3 Borrower shall make appropriate entries upon its financial
statements and its books and records disclosing Bank's security
interest in the Collateral.
3.4 Borrower shall execute and deliver to Bank, at the request of
Bank, all agreements, instruments and documents ("Supplemental
Documentation") that Bank reasonably may request, in form and
substance acceptable to Bank, to perfect and maintain perfected Bank's
security interest in the Collateral and to consummate the transactions
contemplated in or by this Agreement and the Other Agreements.
Borrower agrees that a photographic or photostatic copy, or other
reproduction of this Agreement or of any financing statement, shall be
sufficient to evidence Bank's security interest.
3.5 Bank shall have the right upon two (2) business days prior
notice to Borrower, at any time during Borrower's usual business
hours, to inspect the Collateral and all related records (and the
premises upon which it is located) and to verify the amount and
condition of or any other matter relating to the Collateral.
3.6 Borrower warrants and represents to and covenants with Bank
that: (a) Bank's security interest in the Collateral is now and at all
times hereafter shall be perfected and have a first priority except as
expressly agreed to in writing by Bank; (b) the offices and/or
locations where Borrower keeps the Collateral are specified at the end
of this Paragraph and Borrower shall not remove such Collateral
therefrom except as may occur in the ordinary course of business, and
shall not keep any of such Collateral at any other offices or
locations unless Borrower gives Bank written notice thereof at least
thirty (30) days prior thereto and the same is within the United
States of America; and (c) the addresses specified at the end of this
Paragraph include and designate Borrower's principal executive office,
principal place of business and other offices and places of business
and are Borrower's sole offices and places of business. Borrower, by
written notice delivered to Bank at least thirty (30) days prior
thereto, shall advise Bank of Borrower's opening of any new office or
place of business or its closing of any existing office or place of
business and any new office or place of business shall be within the
United States of America. Borrower has places of business at the
locations listed below:
1) The address of Borrower shown at the beginning of this Agreement;
2) ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
3) ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and
4) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
All of the Collateral currently owned by Borrower and all of the
Collateral hereafter acquired is, or will be held or stored at the
locations listed below:
1) The address of Borrower shown at the beginning of this Agreement;
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2) ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
3) ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and
4) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3.7 Borrower shall not maintain any depository accounts except
such accounts currently maintained with those financial institutions
set forth on EXHIBIT C attached hereto (each individually a "Local
Account" and collectively, the "Local Accounts") and Bank. Borrower
shall deliver to Bank copies of bank statements for each Local Account
at least once per quarter and more frequently upon Bank's request. At
no time shall the available funds maintained in each individual Local
Account exceed $200,000 or exceed $1,000,000 in the aggregate for all
Local Accounts for a period in excess of three (3) business days.
3.8 Upon an Event of Default, at the request of Bank, Borrower
shall receive, as the sole and exclusive property of Bank and as
trustee for Bank, all monies, checks, notes, drafts and all other
payments for and/or proceeds of Collateral which come into the
possession or under the control of Borrower and immediately upon
receipt thereof, Borrower shall remit the same (or cause the same to
be remitted), in kind, to Bank or at Bank's direction. Bank may take
control of, in any manner, and may endorse Borrower's name to any of
the items of payment or proceeds described herein and, pursuant to the
provisions of this Agreement, Bank shall apply the same to and on
account of Borrower's Liabilities.
3.9 Bank may, at its option, at any time or times hereafter, but
shall be under no obligation to pay, acquire and/or accept an
assignment of any security interest, lien, encumbrance or claim
asserted by any Person against the Collateral.
3.10 Immediately upon Borrower's receipt of that portion of the
Collateral evidenced by an agreement, instrument and/or document
("Special Collateral"), Borrower shall ▇▇▇▇ the same to show that such
Special Collateral is subject to a security interest in favor of Bank
and shall deliver the original thereof to Bank, together with
appropriate endorsement and/or specific evidence of assignment (in
form and substance acceptable to Bank) thereof to Bank.
3.11 Regardless of the adequacy of any Collateral securing
Borrower's Liabilities hereunder, any deposits or other sums at any
time credited by or payable or due from Bank to Borrower, or any
monies, cash, cash equivalents, securities, instruments, documents or
other assets of Borrower in possession or control of Bank or its
bailee for any purpose may, upon an Event of Default be reduced to
cash and applied by Bank to or setoff by Bank against Borrower's
Liabilities hereunder.
3.12 Upon an Event of Default, at the request of Bank, Borrower
shall instruct the Obligors of its Accounts to make payments directly
to a lockbox or cash collateral account maintained by Bank in
Borrower's name. All such collections shall be Bank's property to be
applied against Borrower's Liabilities, and not Borrower's property.
Bank may endorse Borrower's name to any of the items of payment or
proceeds described herein.
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4. COLLATERAL: ACCOUNTS
4.1 Any of Bank's officers, employees or agents shall have the
right, at any time or times hereafter, in Bank's name or in the name
of a nominee of Bank, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, facsimile or
otherwise and to sign Borrower's name on any verification of Accounts
and notices thereof to Obligors. All costs, fees and expenses relating
thereto incurred by Bank (or for which Bank becomes obligated) shall
be part of Borrower's Liabilities, payable by Borrower to Bank on
demand.
4.2 Bank shall have the right, now and at any time or times
hereafter, at its option, without notice thereof to Borrower: (a) to
notify any or all Obligors that the Accounts and Special Collateral
have been assigned to Bank and the Bank has a security interest
therein; (b) to direct such Obligors to make all payments due from
them to Borrower upon the Accounts and Special Collateral directly to
Bank; and (c) to enforce payment of and collect, by legal proceedings
or otherwise, the Accounts and Special Collateral in the name of Bank
and Borrower.
4.3 Borrower, irrevocably, hereby designates, makes, constitutes
and appoints Bank (and all Persons designated by Bank) as Borrower's
true and lawful attorney (and agent-in-fact), with power, upon an
Event of Default, or an event or condition which with notice or lapse
of time would constitute an Event of Default, without notice to
Borrower and in Borrower's or Bank's name: (a) to demand payment of
Accounts; (b) to enforce payment of the Accounts by legal proceedings
or otherwise; (c) to exercise all of Borrower's rights and remedies
with respect to the collection of the Accounts; (d) to settle, adjust,
compromise, discharge, release, extend or renew the Accounts; (e) to
settle, adjust or compromise any legal proceedings brought to collect
the Accounts; (f) to sell or assign the Accounts upon such terms, for
such amounts and at such time or times as Bank deems advisable; (g) to
prepare, file and sign Borrower's name on any notice of lien,
assignment or satisfaction of lien or similar document in connection
with the Accounts and Special Collateral; or (h) to prepare, file and
sign Borrower's name on any Proof of Claim in Bankruptcy or similar
document against any Obligor.
5. WARRANTIES, REPRESENTATIONS AND COVENANTS:
INSURANCE AND TAXES
5.1 Borrower, at its sole cost and expense, shall keep and
maintain: (a) the Collateral insured for the full insurable value
against all hazards and risks ordinarily insured against by other
owners or users of such properties in similar businesses; and (b)
business interruption insurance and public liability and property
damage insurance relating to Borrower's ownership and use of its
assets. All such policies of insurance shall be in a form with
insurers and in such amounts as may be reasonably satisfactory to
Bank. Borrower shall deliver to Bank the original (or certified) copy
of each policy of insurance, or a certificate of insurance, and
evidence of payment of all premiums for each such policy. Such
policies of insurance (except those of public liability) shall contain
a standard form lender's loss payable clause, in form and substance
acceptable to Bank, showing loss payable to Bank, and shall provide
that: (i) the insurance companies will give Bank at least thirty (30)
days written notice before any such
11
policy or policies of insurance shall be altered or canceled; and (ii)
no act or default of Borrower or any other Person shall effect the
right of Bank to recover under such policy or policies of insurance in
case of loss or damage. Borrower hereby directs all insurers under
such policies of insurance (except those of public liability) to pay
all proceeds payable thereunder directly to Bank and hereby authorizes
Bank to make, settle, and adjust claims under such policies of
insurance and endorse the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies
of insurance.
Unless Borrower provides Bank with evidence of the insurance
coverage required by this Agreement, Bank may purchase insurance at
Borrower's expense to protect Bank's interests in the Collateral. This
insurance may, but need not, protect Borrower's interests. The
coverage that Bank purchases may not pay any claim that Borrower makes
or any claim that is made against Borrower in connection with the
Collateral. Borrower may later cancel any insurance purchased by Bank,
but only after providing Bank with evidence that Borrower has obtained
insurance as required by this Agreement. If Bank purchases insurance
for the Collateral, Borrower will be responsible for the costs of that
insurance, including interest and other reasonable charges Bank may
impose in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to Borrower's total outstanding
balance or obligation. The costs of the insurance may be more than the
cost of the insurance Borrower is able to obtain on its own.
5.2 Borrower shall pay promptly, when due, all Charges, and shall
not permit any Charges to arise, or to remain and will promptly
discharge the same.
6. WARRANTIES, REPRESENTATIONS AND COVENANTS:
GENERAL
6.1 Borrower warrants and represents to and covenants with Bank
that: (a) Borrower has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and perform
this Agreement and the Other Agreements; (b) Borrower possesses all
licenses, registrations and authorizations from and with any
Governmental Authority, Self-Regulatory Organization or securities
exchange necessary or material to the conduct of its business as now
or presently proposed to be conducted; (c) Borrower is (i) duly
registered with the Commission as a broker-dealer under the Exchange
Act, (ii) a member in good standing of the NASD and SIPC, (iii) not in
arrears in regard to any assessment made upon it by the SIPC, and (iv)
has received no notice from the Commission, NASD, MSRB, CFTC or any
other Governmental Authority, Self-Regulatory Organization or
securities exchange of any alleged rule violation or other
circumstance which could reasonably be expected to have a Material
Adverse Effect, except as disclosed in the financial statements (as
defined in SECTION 6.4 below); (d) Guarantor is a member in good
standing of the AMEX; (e) Borrower has and at all times hereafter
shall have good, indefeasible and merchantable title to and ownership
of the Collateral, free and clear of all liens, claims, security
interests and encumbrances except those of Bank; (f) Borrower is now
and at all times hereafter, shall be solvent and generally paying its
debts as they mature and Borrower now owns and shall at all times
hereafter own property which, at a fair valuation,
12
is greater than the sum of its debts; and (g) Borrower is not in
default with respect to any indenture, loan agreement, mortgage, deed
or other similar agreement relating to the borrowing of monies to
which it is a party or by which it is bound except where such default
would not have a Material Adverse Effect.
6.2 Borrower, with respect to itself, and Guarantor, with respect
to itself and WestAmerica, warrants and represents to and covenants
with the Bank that Borrower, WestAmerica and Guarantor have complied
in all material respects with all applicable laws, statutes, and
rules, regulations, orders and decrees or restrictions of any
Governmental Authority, Self-Regulatory Organization or securities
exchange having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties (including,
without limitation, the Exchange Act, the Advisers Act, the Investment
Company Act, the CEA, and the applicable rules and regulations of the
Commission, NASD, AMEX, MSRB and CFTC), except where the failure to so
comply could not reasonably be expected to have a Material Adverse
Effect. Without limiting the foregoing, Borrower, WestAmerica and
Guarantor are in compliance with all applicable capital requirements
of all Governmental Authorities (including, without limitation, Rule
15c3-1). Neither the execution and delivery by Borrower, WestAmerica
or Guarantor of the Loan Documents, the application of the proceeds of
the Loans, the consummation of any transaction contemplated by the
Loan Documents, nor compliance with the provisions of the Loan
Documents will, or at the relevant time did, (a) violate any law,
rule, regulation (including Regulations T, U and X), order, writ,
judgment, injunction, decree or award binding on Borrower, WestAmerica
or Guarantor, (b) violate or conflict with Borrower's, WestAmerica's
or Guarantor's charter, articles or certificate of incorporation or
by-laws, (c) violate the provisions of or require the approval or
consent of any party to any indenture, instrument or agreement to
which Borrower, WestAmerica or Guarantor is a party or is subject, or
by which they, or their Property, are bound, or conflict with or
constitute a default thereunder, or result in the creation or
imposition of any Lien in, of or on the Property of Borrower or any
affiliate pursuant to the terms of any such indenture, instrument or
agreement, or (d) require the consent or approval of any Person,
except for any violation of, or failure to obtain an approval or
consent required under, any such indenture, instrument or agreement
that could not have a Material Adverse Effect.
6.3 Borrower warrants and represents to and covenants with the
Bank that no order, consent, approval, qualification, license,
authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any Governmental
Authority, Self-Regulatory Organization or securities exchange is
necessary or required in connection with the execution, delivery,
consummation or performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents, the
application of the proceeds of the Loans, or the consummation of any
other transaction contemplated by the Loan Documents. Neither Borrower
nor any affiliate is in default under or in violation of any foreign,
Federal, state or local law, rule, regulation, order, writ, judgment,
injunction, decree or award binding upon or applicable to Borrower or
such affiliate, in each case the consequence of which default or
violation could reasonably be expected to have a Material Adverse
Effect.
6.4 Borrower warrants and represents to and covenants with Bank
that:
14
(a). Borrower has heretofore furnished to Bank and will furnish
to the Bank: (i) the September 24, 1999 audited consolidated financial
statements of Borrower and its affiliates and (ii) the June 30, 2000
unaudited consolidated financial statements of Borrower and its
affiliates (collectively, the "FINANCIAL STATEMENTS"). Borrower has
also heretofore furnished to Bank the December 31, 1999, March 31,
2000, June 30, 2000 and September 30, 2000 quarterly FOCUS Reports of
Borrower and WESTAMERICA (the "CLOSING FOCUS REPORTS"). The Closing
FOCUS Reports are correct and complete in all material respects and
conform in all material respects to Exchange Act requirements and
applicable Commission rules and regulations.
(b). as soon as practicable and in any event within 20 business
days after the close of each month, Borrower shall deliver to Bank the
Focus Reports for such month filed by Borrower and WestAmerica with
the Commission.
(c). as soon as possible and in any event within 10 days after
any Authorized Officer of Borrower learns thereof, Borrower shall
deliver to Bank notice of the assertion or commencement of any claim,
action, litigation, suit or proceeding against or affecting Borrower
or Guarantor, including any investigation or proceeding commenced by
the Commission, NASD, MSRB, AMEX or any other Governmental Authority,
Self-Regulatory Organization or securities exchange, which could
reasonably be expected to have a Material Adverse Effect.
(d). as soon as available but not later than one hundred (100)
days after the close of each fiscal year of Guarantor, Borrower shall
deliver to Bank audited consolidated financial statements, which shall
include, but not be limited to, balance sheets, income statements and
statements of cash flow of Guarantor, prepared in accordance with
generally accepted accounting principles, consistently applied,
audited by a firm of independent certified public accountants selected
by Guarantor and acceptable to Bank.
(e). as soon as available but not later than fifty (50) days
after the end of each Fiscal Quarter hereafter, Borrower shall deliver
to Bank consolidated financial statements of Guarantor and each of its
subsidiaries, on a consolidated and consolidating basis, certified by
Guarantor to be prepared in accordance with generally accepted
accounting principles and which fairly present the financial position
and results of operations of Guarantor and each of its subsidiaries
for such period.
(f). Within 3 business days of the last Friday of each month,
Borrower shall deliver to Bank the Weekly CUstomer Credit/debit
Calculation Reports for such month substantially in the form of
EXHIBIT B attached hereto. Borrower shall deliver such reports to Bank
on an interim basis upon Bank's written request.
(g). Borrower shall deliver to Bank such other data and
information (financial and otherwise) as Bank, from time to time, may
reasonably request.
6.5 Borrower, on behalf of itself, and Guarantor, on behalf of
itself, warrants and represents to and covenants with Bank that it
shall not, without Bank's prior written consent thereto: (a) grant a
security interest in or assign any of the Collateral to any Person or
permit, grant, or
14
suffer a Lien, claim or encumbrance upon any of the Collateral, except
Liens (i) incurred in the ordinary course of the settlement of
securities transactions; (ii) imposed by law or statutory obligation
and incurred in the ordinary course of business which are not
delinquent or remain payable without penalty; (iii) incurred in
respect of worker's compensation claims; or (iv) set forth on SCHEDULE
6.5; (b) sell or transfer any of the Collateral not in the ordinary
course of business; (c) enter into any transaction not in the ordinary
course of business which materially and adversely affects the
Collateral or Borrower's ability to repay Borrower's Liabilities or
Indebtedness; (d) other than as specifically permitted in or
contemplated by this Agreement, encumber, pledge, mortgage, sell,
lease or otherwise dispose of or transfer, whether by sale, merger,
consolidation or otherwise, any of its assets; and (e) incur
Indebtedness except: (i) unsecured trade debt in the ordinary course
of business; (ii) renewals or extensions of existing Indebtedness and
interest thereon; and (iii) Indebtedness that is unsecured and is to
Persons who execute and deliver to Bank in form and substance
reasonably acceptable to Bank and its counsel subordination agreements
subordinating their claims against Borrower or Guarantor therefor to
the payment of Borrower's Liabilities and of the Guaranty.
Notwithstanding the foregoing, Bank's consent will not be required in
connection with Acquisition Indebtedness described in Section 6.10,
except as set forth therein. In addition, upon receipt and
satisfactory review of documentation regarding Borrower's unsecured
loan from Bear ▇▇▇▇▇▇▇, Bank's consent to Borrower's incurrence of
such Indebtedness shall not be unreasonably withheld.
6.6 Borrower and Guarantor, will maintain the primary treasury
management relationship of each with Bank and will establish such
accounts and maintain balances therein with Bank sufficient to cover
the cost of all Bank services provided; provided however, that nothing
herein shall require Borrower and Guarantor to keep and maintain a
specific minimum balance in such account. In the event that funds in
Borrower's or Guarantor's accounts are not sufficient to cover service
charges, they will be paid to Bank on an annual basis.
6.7 Borrower warrants and represents to and covenants with Bank
that, neither the making of any Advance hereunder or the use of the
proceeds thereof will violate or be inconsistent with the provisions
of Regulation T, Regulation U or Regulation X.
6.8 Borrower will, and Guarantor will and will cause WestAmerica
to, maintain all registrations, licenses, consents, approvals and
authorizations from and with any Governmental Authority,
Self-Regulatory Organization or securities exchange necessary or
material to the conduct of their respective businesses.
6.9 Neither Borrower nor Guarantor will create, incur or suffer
to exist any Indebtedness, except accounts payable incurred in the
ordinary course of business and except:
(a). Securities sold under agreements to repurchase (to the
extent such obligations constitute Indebtedness);
(b). (i) Moneys due to counterparties under stock loan
transactions, (ii) liabilities to customers for cash on deposit, and
(iii) liabilities to brokers, dealers and clearing organizations
15
relating to the settlement of securities transactions or secured by
customer securities in accordance with the SEC's Customer Protection
Rule 15c3-3; and
(c). Indebtedness incurred pursuant to Section 6.10.
6.10 Borrower will not make or suffer to exist, nor will
Guarantor make or suffer to exist, any Investments (including, without
limitation, loans and advances to, and other Investments in,
Affiliates), or commitments therefor, or to make any Acquisition of
any Person, except (i) Guarantor's existing Investment in Borrower and
additional Investments of Guarantor in Subsidiaries, (ii) Borrower's
existing Investment in Subsidiaries of Borrower, but not any
additional Investments therein, (iii) publicly-traded securities and
private equity participations in the ordinary course of business, (iv)
loans to employees, brokers or others in the ordinary course of
business which do not exceed $100,000 individually or $1,000,000 in
the aggregate for Guarantor and Borrower. In addition, upon notice to
Bank and provided no Default or Event of Default exists at the time
of, and after giving effect to, the Acquisition, Guarantor or Borrower
may make an Acquisition of assets, personnel, securities or other
equity interests in any Person if (x) the sole consideration for the
Acquisition is the issuance of stock in Guarantor, and/or the
assumption or issuance to seller of Indebtedness by Guarantor and, in
the case of Acquisitions by Borrower, of Borrower, (y) if the
Acquisition is by Borrower, the Acquisition is of assets and not stock
or other equity interests of any Person, and Bank is granted a first
priority security interest in and pledge of the assets acquired,
subject in the case of furniture and equipment, to existing Liens
thereon of equipment lessors or landlords of the premises acquired not
to exceed $50,000 in aggregate unpaid rents for all such Liens in
connection with all Acquisitions, and (z) any Indebtedness incurred,
assumed by, or guaranteed by Borrower or Guarantor in connection with
an Acquisition shall be unsecured and shall not result in annual
interest being paid on such Indebtedness, together with all interest
payable on all other indebtedness incurred, guaranteed or assumed
under this Section 6.10, of greater than $250,000 in the aggregate.
Notwithstanding the foregoing, Borrower must obtain Bank's prior
written consent to any Acquisition to be made by it even though in
conformity with this Section 6.10, which consent will not be
unreasonably withheld.
6.11 Borrower will not make or suffer to exist, and Guarantor
will not make or suffer to exist, any guaranties, except (i) by
endorsement of instruments for deposit or collection in the ordinary
course of business, (ii) in connection with the clearance of
securities transactions in the ordinary course of business, and (iii)
the Guaranty.
6.12 Neither Borrower nor Guarantor will merge or consolidate
with or into any Person.
6.13 Borrower shall at all times maintain a minimum NSC Excess
Net Capital of $2,000,000.
16
6.14 Guarantor shall insure that WestAmerica at all times
maintains a minimum WestAmerica Excess Net Capital of $50,000.
6.15 Neither Borrower nor Guarantor will maintain any securities
accounts with any broker, dealer, bank or other securities
intermediary, except such securities accounts as are pledged on a
first priority basis to Bank and maintained with the securities
intermediary Bear ▇▇▇▇▇▇▇ Securities Corporation, located at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, 212.272.1000 in the
jurisdiction of .
6.16 Borrower, as to itself, and Guarantor as to itself,
represents and warrants that each has no Subsidiaries except for those
Subsidiaries set forth below the name of each on SCHEDULE 6.16 hereto.
7. CONDITIONS PRECEDENT
7.1 INITIAL LOANS. Bank shall not be required to make the initial
Advance hereunder unless Borrower has furnished the following and the
other conditions set forth below have been satisfied, in each case on
a date (the "Closing Date") on or before January 10, 2001:
(A). CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of the
certificate of incorporation of Borrower and Guarantor, together with
all amendments thereto, certified by the Secretary of State of the
states of Washington and Delaware, respectively, together with good
standing certificates (i) as to Borrower, from the states of Washington
and New York and (ii) as to the Guarantor, from the States of Delaware
and Illinois.
(B). BORROWER'S BY-LAWS AND RESOLUTIONS. Copies, certified by the
Secretary or Assistant Secretary of Borrower, of its by-laws and of
its Board of Directors' resolutions authorizing the execution,
delivery and performance of the Loan Documents to which Borrower is a
party.
(C). BORROWER'S SECRETARY'S CERTIFICATE. An incumbency
certificate, executed by the Secretary or Assistant Secretary of
Borrower, which shall identify by name and title and bear the
signature of the officers of Borrower authorized to sign the Loan
Documents and to make borrowings hereunder, upon which certificate
Bank shall be entitled to rely until informed of any change in writing
by Borrower.
(D). BORROWER'S OFFICER'S CERTIFICATE. A certificate, dated the
date of this Agreement, signed by the chief financial officer of
Borrower, in form and substance satisfactory to Bank, to the effect
that: (i) on such date (both before and after giving effect to the
making of any Loans hereunder) no Default or Unmatured Default has
occurred and is continuing and (ii) each of the representations and
warranties set forth in SECTIONS 5 AND 6 of this Agreement is true and
correct on and as of such date.
(E). GUARANTOR'S BY-LAWS AND RESOLUTIONS. Copies, certified by
the Secretary
or Assistant Secretary of Guarantor, of its by-laws and of its Board of
17
Directors' resolutions authorizing the execution, delivery and
performance of the Loan Documents to which Guarantor is a party.
(F). GUARANTOR'S SECRETARY'S CERTIFICATE. An incumbency
certificate, executed by the Secretary or Assistant Secretary of
Guarantor, which shall identify by name and title and bear the
signature of the officers of Guarantor authorized to sign the Loan
Documents, upon which certificate Bank shall be entitled to rely until
informed of any change in writing by the Guarantor.
(G). LEGAL OPINION. A favorable written opinion of Much Shelist
Freed ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C., counsel to Borrower and
Guarantor, addressed to Bank in form and substance acceptable to Bank
and its counsel.
(H). LOAN DOCUMENTS. Executed originals of this Agreement, each
of the other Loan Documents (including any notes requested by Bank
pursuant to SECTION 2.1 payable to the order of Bank), which shall be
in full force and effect, together with all schedules, exhibits,
certificates, instruments, opinions, documents and financial
statements required to be delivered pursuant hereto and thereto.
(I). FINANCIAL STATEMENTS. Copies of the Financial Statements and
the Closing FOCUS Reports referred to in SECTION 6.4.
(J). LETTER OF DIRECTION. Written money transfer instructions
with respect to the initial Advance and, until otherwise instructed,
as to future Advances in form and substance acceptable to Bank signed
by an Authorized Officer, together with such other related money
transfer authorizations as Bank may have reasonably requested.
(K). PAYMENT OF FEES. Borrower shall have paid all accrued and
unpaid fees, costs and expenses to the extent due and payable on or
prior to the execution of this Agreement.
(L). UCC FILINGS. Effected the filing of UCC financing statements
in form and substance, and in such locations as are, satisfactory to
Bank.
(M). PAYOFF LETTER. Delivered to Bank as payoff letter and UCC
terminations statements evidencing payment in full of Borrower's loan
with Bank of America, N.A. and termination and release of all security
interests and liens of Bank of America, N.A. in Borrower's,
Guarantor's and WestAmerica's property.
(N). OTHER. Such other documents as the Bank or its counsel may
have reasonably requested.
7.2 EACH FUTURE ADVANCE. Bank shall not be required to make any
Advance unless on the applicable Borrowing Date:
(a). There exists no Default or Event of Default and none would
result from such Advance;
18
(b). The representations and warranties contained in SECTIONS 5
and 6 are true and correct as of such Borrowing Date; and
(c). A Borrowing Notice shall have been properly submitted.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by BOrrower that the
conditions contained in SECTION 7.2 have been satisfied.
8. DEFAULT
8.1 The occurrence of any one of the following events shall
constitute a default ("Event of Default") under this Agreement: (a) if
Borrower fails to pay any of Borrower's Liabilities when due and
payable or declared due and payable (whether by scheduled maturity,
required payment, acceleration, demand or otherwise); (b) if Borrower
fails or neglects to perform, keep or observe any term, provision,
condition, covenant, warranty or representation contained in this
Agreement or any of the Other Agreements and such failure continues
for 15 days after written notice from Bank; (c) occurrence of an Event
of Default or other breach under any of the Other Agreements
heretofore, now or at any time hereafter delivered by or on behalf of
Borrower or Guarantor to Bank; (d) occurrence of a default under, or
other breach of, any agreement, instrument or document heretofore, now
or at any time hereafter delivered to Bank by any guarantor of
Borrower's Liabilities or by any Person which has granted to Bank a
security interest or lien in such Person's real or personal property
to secure the payment of Borrower's Liabilities; (e) if the Collateral
or any other of Borrower's or Guarantor's assets are attached, seized,
subjected to a writ, or are levied upon or become subject to any Lien
or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors; (f) if a notice of Lien, levy
or assessment is filed of record or given to Borrower with respect to
all or any substantial portion of Borrower's assets by any federal,
state, local department or agency; (g) if Borrower or Guarantor
becomes insolvent or generally fails to pay or admits in writing its
inability to pay debts as they become due, if a petition under Title
11 of the United States Code or any similar law or regulation is filed
by or against Borrower or Guarantor, if Borrower or Guarantor shall
make an assignment for the benefit of creditors, if any case or
proceeding is filed by or against Borrower or Guarantor for its
dissolution or liquidation, if Borrower or Guarantor is enjoined,
restrained or in any way prevented by court order from conducting all
or any material part of its business affairs; (h) the appointment of a
conservator for all or any portion of Borrower's or Guarantor's assets
or the Collateral; (i) the revocation, termination, or cancellation of
the Guaranty without written consent of Bank; (j) if a contribution
failure occurs with respect to any pension plan maintained by Borrower
or any corporation, trade or business that is, along with Borrower, a
member of a controlled group of corporations or controlled group of
trades or businesses (as described in Sections 414(b) and (c) of the
Internal Revenue Code of 1986 or Section 4001 of ERISA) sufficient to
give rise to a lien under Section 302(f) of ERISA; (k) if Borrower or
Guarantor is in default in the payment of any obligations,
indebtedness or other liabilities to any third party and such default
is declared and is not cured within the time, if any, specified
therefor in any agreement governing the same; (l) if any material
statement, report or certificate made or delivered by Borrower,
Guarantor or any of their partners, officers, employees or agents is
not true and correct; (m) Guarantor ceases to own, beneficially and of
record, all the capital
19
stock of Borrower or WestAmerica, (n) the Commission or any
Self-Regulatory Organization has notified the SIPC pursuant to Section
5(a)(1) of the SIPA of facts which indicate that Borrower is in or is
approaching financial difficulty, or the SIPC shall file an
application for a protective decree with respect to Borrower under
Section 5(a)(3) of the SIPA; (o) the Commission or other Governmental
Authority shall revoke or suspend the license or authorization of
Borrower, Guarantor or WestAmerica under Federal or state law to
conduct business as a securities broker-dealer (and such license or
authorization shall not be reinstated within 5 days), or Borrower,
Guarantor or WestAmerica shall be suspended or expelled from
membership in the NASD, AMEX or any other Self-Regulatory Organization
or securities exchange; and (p) any representation or warranty made or
deemed made on by or on behalf of Borrower, Guarantor or WestAmerica
to the Bank under or in connection with this Agreement, any Loan, any
Other Agreement or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be
materially false on the date as of which made.
8.2 All of Bank's rights and remedies under this Agreement and
the Other Agreements are cumulative and non-exclusive.
8.3 Upon an Event of Default or the occurrence of any one of the
events described in Paragraph 8.1, without notice by Bank to or demand
by Bank of Borrower, Bank shall have no further obligation to and may
then forthwith cease advancing monies or extending credit to or for
the benefit of Borrower under this Agreement and the Other Agreements.
Upon an Event of Default, without notice by Bank to or demand by Bank
of Borrower, Borrower's Liabilities shall be immediately due and
payable.
8.4 Upon an Event of Default, Bank, in its sole and absolute
discretion, may exercise any one or more of the rights and remedies
accruing to a secured party under the Uniform Commercial Code of the
relevant state and any other applicable law upon default by a debtor.
8.5 Upon an Event of Default, Borrower, as soon as practical upon
demand by Bank, shall assemble the Collateral and make it available to
Bank at a place or places to be designated by Bank which is reasonably
convenient to Bank and Borrower. Borrower recognizes that in the event
Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement or the Other Agreements, no remedy
of law will provide adequate relief to Bank, and agrees that Bank
shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
8.6 Upon an Event of Default, Bank may take possession of any or
all of the Collateral (in addition to Collateral of which it already
has possession) in accordance with applicable laws, wherever it may be
found, and for that purpose may pursue the same wherever it may be
found, and may enter into any of Borrower's premises where any of the
Collateral may be or is supposed to be, and search for, take
possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of, and Bank shall have the
right to store the same in any of Borrower's premises without cost to
Bank.
20
8.7 Any notice required to be given by Bank of a sale, lease, or
other disposition of the Collateral or any other intended action by
Bank, (i) deposited in the United States mail, postage prepaid and
duly addressed to Borrower at the address specified at the beginning
of this Agreement, or (ii) sent via certified mail, return receipt
requested, or (iii) sent via facsimile, or (iv) delivered personally,
not less than ten (10) days prior to such proposed action, with a copy
to ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer of Guarantor at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ via any method
set forth in (i) - (iv) shall constitute commercially reasonable and
fair notice to Borrower.
8.8 Upon an Event of Default, Borrower agrees that Bank may, if
Bank deems it reasonable, postpone or adjourn any such sale of the
Collateral from time to time by an announcement at the time and place
of sale or by announcement at the time and place of such postponed or
adjourned sale, without being required to give a new notice of sale.
Borrower agrees that Bank has no obligation to preserve rights against
prior parties to the Collateral. Further, to the extent permitted by
law, Borrower waives and releases any cause of action and claim
against Bank as a result of Bank's possession, collection or sale of
the Collateral, any liability or penalty for failure of Bank to comply
with any requirement imposed on Bank relating to notice of sale,
holding of sale or reporting of sale of the Collateral, and any right
of redemption from such sale.
9. GENERAL
9.1 Borrower waives the right to direct the application of any
and all payments at any time or times hereafter received by Bank on
account of Borrower's Liabilities and Borrower agrees that Bank shall
have the continuing exclusive right to apply and re-apply any and all
such payments in such reasonable manner as Bank may deem advisable,
notwithstanding any entry by Bank upon any of its books and records.
9.2 Borrower covenants, warrants and represents to Bank that all
representations and warranties by or on behalf of Borrower, Guarantor
or WestAmerica contained in this Agreement and the Other Agreements
shall be true in all material respects from the time of Borrower's
execution of this Agreement to the end of the original term and each
renewal term hereof. All of Borrower's warranties, representations,
undertakings, and covenants contained in this Agreement or the Other
Agreements shall survive the termination or cancellation of the same.
9.3 The terms and provisions of this Agreement and the Other
Agreements shall supersede any prior agreement or understanding of the
parties hereto, and contain the entire agreement of the parties hereto
with respect to the matters covered herein. This Agreement and the
Other Agreements may not be modified, altered or amended except by an
agreement in writing signed by Borrower and Bank. Except for the
provisions of Section 2 hereof which shall terminate as provided in
paragraph 2.8, this Agreement shall continue in full force and effect
so long as any portion or component of Borrower's Liabilities shall be
outstanding. Should a claim ("Recovery Claim") be made upon the Bank
at any time for recovery of any amount received by the Bank in payment
of Borrower's Liabilities (whether received from Borrower or
otherwise) and should the Bank repay all or part of said amount by
reason of (1) any judgment, decree or order of any court or
administrative body having jurisdiction over Bank or any of its
property; or (2) any
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settlement or compromise of any such Recovery Claim effected by the
Bank with the claimant (including Borrower), this Agreement and the
security interests granted Bank hereunder shall continue in effect
with respect to the amount so repaid to the same extent as if such
amount had never originally been received by the Bank, notwithstanding
any prior termination of this Agreement, the return of this Agreement
to Borrower, or the cancellation of any note or other instrument
evidencing Borrower's Liabilities. Borrower may not sell, assign or
transfer this Agreement, or the Other Agreements or any portion
thereof.
9.4 Bank's failure to require strict performance by Borrower of
any provision of this Agreement shall not waive, affect or diminish
any right of Bank thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Bank of an Event of
Default by Borrower under this Agreement or the Other Agreements shall
not suspend, waive or affect any other Event of Default by Borrower
under this Agreement or the Other Agreements, whether the same is
prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or the Other
Agreements and no Event of Default by Borrower under this Agreement or
the Other Agreements shall be deemed to have been suspended or waived
by Bank unless such suspension or waiver is by an instrument in
writing signed by an officer of Bank and directed to Borrower
specifying such suspension or waiver.
9.5 If any provision of this Agreement or the Other Agreements or
the application thereof to any Person or circumstance is held invalid
or unenforceable, the remainder of this Agreement and the Other
Agreements and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this
Agreement and the Other Agreements shall be severable in any such
instance.
9.6 This Agreement and the Other Agreements shall be binding upon
and inure to the benefit of the successors and assigns of Borrower.
This provision, however, shall not be deemed to modify Paragraph 9.3
hereof.
9.7 Borrower hereby appoints Bank as Borrower's agent and
attorney-in-fact for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any agreement,
instrument or document which Bank may reasonably deem necessary or
advisable to accomplish the purposes hereof which appointment is
irrevocable and coupled with an interest. All monies paid for the
purposes herein, and all costs, fees and expenses paid or incurred in
connection therewith, shall be part of Borrower's Liabilities, payable
by Borrower to Bank on demand.
9.8 This Agreement, or a photographic or other reproduction of
this Agreement or of any Uniform Commercial Code financing statement
covering the Collateral or any portion thereof, shall be sufficient as
a Uniform Commercial Code financing statement and may be filed as
such.
9.9 Except as otherwise provided in the Other Agreements, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Other Agreements, the
provision contained in this Agreement shall govern and control.
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9.10 Except as otherwise specifically provided in this Agreement,
Borrower waives any and all notice or demand which Borrower might be
entitled to receive by virtue of any applicable statute or law, and
waives presentment, demand and protest and notice of presentment,
protest, default, dishonor, non-payment, maturity, release,
compromise, settlement, extension or renewal of any and all
agreements, instruments or documents at any time held by Bank on which
Borrower may in any way be liable.
9.11 Until Bank is notified by Borrower to the contrary in
writing by registered or certified mail directed to Bank's principal
place of business, the signature upon this Agreement or upon any of
the Other Agreements of any Authorized Officer, partner, manager,
employee or agent of Borrower, or of any other Person designated in
writing to Bank by any of the foregoing, shall bind Borrower and be
deemed to be the duly authorized act of Borrower.
9.12 THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION
105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
9.13 If at anytime or times hereafter, whether or not Borrower's
Liabilities are outstanding at such time, Bank: (a) employs counsel
for advice or other representation, (i) with respect to the
Collateral, this Agreement, the Other Agreements or the administration
of Borrower's Liabilities, (ii) to represent Bank in any litigation,
arbitration, contest, dispute, suit or proceeding or to commence,
defend or intervene or to take any other action in or with respect to
any litigation, arbitration, contest, dispute, suit or proceeding
(whether instituted by Bank, Borrower or any other Person) in any way
or respect relating to the Collateral, this Agreement, the Other
Agreements, or Borrower's affairs, or (iii) to enforce any rights of
Bank against Borrower or any other Person which may be obligated to
Bank by virtue of this Agreement or the Other Agreements, including,
without limitation, any Obligor; (b) takes any action with respect to
administration of Borrower's Liabilities or to protect, collect, sell,
liquidate or otherwise dispose of the Collateral; and/or (c) attempts
to or enforces any of Bank's rights or remedies under this Agreement
or the Other Agreements, including, without limitation, Bank's rights
or remedies with respect to the Collateral, the reasonable costs and
expenses incurred by Bank in any manner or way with respect to the
foregoing, shall be part of Borrower's Liabilities, payable by
Borrower to Bank on demand.
9.14 The Bank may provide, without any limitation whatsoever, any
information or knowledge the Bank may have about the undersigned or
any matter relating to this agreement and any related documents to
BANK ONE CORPORATION, or any of its subsidiaries or affiliates or
their successors, or to any one or more purchasers or potential
purchasers of this agreement or any related documents, and the
undersigned waives any right to privacy the undersigned may have with
respect to such matters. Borrower agrees that the Bank may at any time
sell, assign or transfer one or more interests or participations in
all or any part of its rights or obligations in this agreement to one
or more purchasers whether or not related to the Bank.
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9.15 BORROWER AND GUARANTOR IRREVOCABLY AGREE THAT, SUBJECT TO
BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED
ONLY IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF
ILLINOIS. BORROWER AND GUARANTOR HEREBY CONSENT AND SUBMIT TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID
CITY AND STATE. BORROWER AND GUARANTOR HEREBY WAIVE ANY RIGHT EITHER
MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST BORROWER OR GUARANTOR BY BANK IN ACCORDANCE WITH THIS
PARAGRAPH.
9.16 BORROWER AND GUARANTOR HEREBY IRREVOCABLY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO
ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE OTHER AGREEMENTS, OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING FROM
ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO
THIS AGREEMENT, THE OTHER AGREEMENTS, OR ANY SUCH AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREE THAT ANY SUCH ACTION,
SUIT, COUNTERCLAIM OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
BORROWER:
GUARANTOR (As to matters set
forth in Article
6 and Article 9):
BY: By:
------------------------------- --------------------------------
PRINT OR TYPE NAME: Print or Type Name:
------------------------ -----------------
ITS: Its:
--------------------------------------- --------------------------------
Accepted this 10th day of January, 2001, at Bank's principal place of
business in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By:
---------------------------
Print or Type Name:
-------------------
Its:
---------------------------
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