BUSINESS LOAN AGREEMENT
Borrower: REAL GOODS TRADING CORPORATION
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Lender: National Bank of the Redwoods
Ukiah ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS BUSINESS LOAN AGREEMENT between REAL GOODS TRADING
CORPORATION ("Borrower") and National Bank of the Redwoods
("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 April 8, 1997, and
shall continue thereafter until all Indebtedness of Borrower to
Lender has been performed in full and the parties terminate this
Agreement in writing.
DEFINITIONS. The following words shall have the following
meanings when used in this Agreement. Terms not otherwise defined
in this Agreement shall have the meanings attributed to such
terms in the Uniform Commercial Code. All references to dollar
amounts shall mean amounts in lawful money of the United States
of America.
Agreement. The word "Agreement" means this 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 REAL GOODS TRADING
CORPORATION. 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.
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.
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 entitles granting a Security
Interest in any Collateral tor the Indebtedness, including
without limitation all Borrowers granting such a Security
Interest.
Guarantor. The word "Guarantor" means and includes without
limitation each and all of the guarantors, sureties, and
accommodation parties in connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts
and liabilities of Borrower to Lender, or any one or more of
them, as well as all claims by Lender against Borrower, or any
one or more of them; whether now or hereafter existing, voluntary
or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety, or otherwise; whether recovery
upon such Indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such Indebtedness may be
or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means National Bank of the Redwoods,
its successors and assigns.
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 therefore.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and
security interests securing Indebtedness owed by Borrower to
Lender; (b) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith; (c) liens of
materialmen, mechanics, warehousemen, or carriers, or other like
liens arising in the ordinary course of business and securing
obligations which are not yet delinquent; (d) purchase money
liens or purchase money security interests upon or in any
property acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this
Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens"; (e) liens and security
interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets.
Related Document. 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.
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 guaranties 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 California and is validly existing and in good standing
in all states in which Borrower is doing business. Borrower has
the full power and authority to own its properties and to
transact the businesses in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as
a foreign corporation and is in good standing in all states in
which the failure to so qualify would have a material adverse
effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to
be executed delivered or performed by Borrower, have been duly
authorized by all necessary action by Borrower, do not require
the consent or approval of any other person, regulatory authority
or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of
its articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Borrower or (b) any
law, governmental regulation, court decree, or order applicable
to Borrower.
Financial Information. Each financial statement of 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 Borrowers 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.,
Chapters 6.5 through 7.7 of Division 20 of the California Health
and Safety Code, Section 25100, et seq., or other applicable
state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. Except as disclosed to and acknowledged by
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
release of any hazardous waste or substance on, under, about or
from the properties by any prior owners or occupants of any of
the properties, or (ii) any actual or threatened litigation or
claims of any kind by any person relating to such matters. (c)
Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous
waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation those
laws, regulations and ordinances described above. Borrower
authorizes Lender and its agents to enter upon the properties to
make such inspections and tests as Lender may deem appropriate to
determine compliance of the properties with this section of the
Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not
be construed to create any responsibility or liability on the
part of Lender to Borrower or to any other person. The
representations and warranties contained herein are based on
Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a)
releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable
for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which
Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to
Borrower's ownership or interest in the properties, whether or
not the same was or should have been known to Borrower. The
provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the
indebtedness and the termination or expiration of this Agreement
and shall not be affected by Lenders 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 Borrowers 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 Borrowers Loan and Note, that
would be prior or that may in any way be superior to Lenders
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements
directly or indirectly securing repayment of Borrowers Loan and
Note and all of the Related Documents are binding upon Borrower
as well as upon Borrowers 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
Borrowers 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 effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material
adverse changes in Borrowers 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
Borrowers books and records at all reasonable times.
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
Borrowers financial condition and business operations as Lender
may request from time to time.
Insurance. Maintain fire and other risk insurance, public
liability insurance, as Lender may require with respect to
Borrowers 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 cancelled or diminished without at least ten (10) days prior
written notice to Lender. Each insurance policy also shall include
an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower
or any other person. In connection with 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.
Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guarantees of the Loans in favor of Lender, executed by
the guarantor named below. on Lender s forms, and in the amount
and under the conditions spelled out in those guaranties.
Guarantor ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Amount $1,500,000
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 Borrowers
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 Borrowers 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 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. Conduct its business affairs in a reasonable and
prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations,
including without limitation, compliance with the Americans With
Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's
employee benefit plans.
Inspection. Permit employees or agents of Lender at any
reasonable time to inspect any and all Collateral for the Loan or
Loans and 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
Borrowers chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of
the date of the certificate and further certifying that, as of
the date of the certificate, no Event 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:
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
Borrowers 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. Borrower does not require prior written
consent from bank for these transactions which are less than
$25,000.
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; or (d) any Guarantor seeks, claims
or otherwise attempts to limit, modify or revoke such Guarantor's
guaranty of the Loan or any other loan with Lender.
EXHIBIT "A" - COVENANTS. An exhibit, titled "EXHIBIT "A" -
Covenants," is attached to this Agreement and by this reference
is made a part of this Agreement just as if all the provisions,
terms and conditions of the Exhibit had been fully set forth in
this Agreement.
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, Borrowers 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 in any of the Related
Documents, or failure of Borrower to comply with or to perform
any other term, obligation, covenant or condition contained in
any other agreement between Lender and Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of
any other creditor or person that may materially affect any of
Borrower's property or Borrower's or any Grantor's ability to
repay the Loans or perform their respective obligations under
this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made
or furnished to Lender by or on behalf of Borrower or any Grantor
under this Agreement or the Related Documents is false or
misleading in any material respect at the time made or furnished,
or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including
failure of any Security Agreement to create a valid and perfected
Security Interest) at any time and for any reason.
Insolvency. The dissolution or termination of 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
Borrowers deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness or any
Guarantor dies or becomes incompetent or revokes or disputes the
validity of or liability under any Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of twenty-five
percent (25%) or more of the common stock of Borrower.
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.
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 Lenders 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 duties sought to be changed or
bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and
accepted by Lender In the State of California. If there is a
lawsuit Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of Mendocino County the State of
California. This Agreement shall be governed by and construed In
accordance with the laws of the State of California.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement. Multiple Parties;
Corporate Authority. All obligations of Borrower under this
Agreement shall be joint and several and all references to
Borrower shall mean each and every Bonower. This means that each
of the persons signing below is responsible for all obligations
in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to
Lenders 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 Borrowers 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 interest may enforce its
interests irrespective of any personal Claims or defenses that
Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of
Lenders reasonable expenses, including without limitation
attorney's fees, incurred in connection with the preparation,
execution, enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to this
Agreement. 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, Lenders
attorneys fees and Lenders legal expenses, whether or not there
is a lawsuit, including attorney's 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, 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
deemed to be modified to be within the limits of enforceability
or validity; however, if the offending provision cannot be so
modified it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.
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 shall bind its successors and assigns
and shall inure to the benefit of Lender, its successors and
assigns. Borrower shall not, however, have the right to assign
its rights under this Agreement or any interest therein, without
the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other
instrument delivered by Borrower to Lender under this Agreement
shall be considered to have been relied upon by 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.
Time Is of the Essence. Time is of the essence in the performance
of this Agreement.
Waiver. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and
signed by 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 shall not prejudice or constitute a waiver of Lender s
right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by
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 withheld in the
sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS
AGREEMENT IS DATED AS OF APRIL 8, 1997.
BORROWER: REAL GOODS TRADING CORPORATION
BY: [S]▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
LENDER: National Bank of the Redwoods
[S]▇▇▇▇ ▇▇▇▇▇
BY: Authorized Officer
EXHIBIT "A" - COVENANTS
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: REAL GOODS TRADING CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: National Bank of the Redwoods
Ukiah ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
This EXHIBIT "A" - Covenants is attached to and by this reference
is made a part of each Business Loan Agreement or Negative Pledge
Agreement, dated April 8, 1997, and executed in connection with a
Loan or other financial accommodations between National Bank of
the Redwoods and REAL GOODS TRADING CORPORATION.
BORROWER AGREES TO PROVIDE:
Monthly Inventory Valuation Reports due within 20 days of month
end. Quarterly 10Q Corporate Financial Statements due within
45 days of quarter end.
Annual CPA audited FYE Corporate Financial Statements due within
90 days of 3-31.
Copy of annual Corporate Tax Return starting with tax return for
3-31-97 due 9-30-97.
Annual Personal Financial Statement for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
Copy of annual Personal Tax Return or Extension for ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ starting with 1996.
BORROWER AGREES THAT:
Current Ratio must be at least 1.25:1.
Total Tangible Debt to net worth ratio not to exceed 1 1, as
measured quarterly.
Positive cash flow after operations is required for the 4
consecutive calendar quarters ending 12/31, as determined
from the 10Q reports. The basis for this calculation is attached
on Exhibit "B", to be completed and signed by Borrower and
submitted to Bank.
BORROWING BASE:
Maximum advance rate on line not to exceed the lesser of
$1,500,000.00 or 50% of the value of inventory located in
California.
Line to be clear 30 consecutive days after December 31.
Bank reserves the right to conduct inventory exams at the
Borrower's expense.
National Bank of the Redwoods will be major depository bank
during term of line.
Liability Insurance coverage must be maintained during term of
loan. Evidence must be furnished to National Bank of the
Redwoods.
Evidence of insurance coverage for Equipment and Inventory is
required and must be maintained during term of loan. National
Bank of the Redwoods to be name Lender's Loss Payee.
Life insurance policy to be maintained in a minimum amount
of $1,000,000.00.
LETTER OF CREDIT SUBLIMIT:
As a sublimit under the Line of Credit, Bank agrees from time to
time to issue sight import letters of credit for the account of
Borrower to support purchases and catalog expenses (each, a
"Letter of Credit" and collectively, "Letters of Credit');
provided however, that the form and substance of each Letter of
Credit shall be subject to approval by Bank, in its sole
discretion; and provided further, that the aggregate undrawn
amount of all outstanding Letters of Credit shall not at any time
exceed THREE HUNDRED THOUSAND DOLLARS ($300,000.00). Each Letter
of Credit shall not have an expiration date subsequent to April
4, 1998. The undrawn amount of all Letters of Credit shall be
reserved under the line of Credit and shall not be available for
advances thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit
Agreement and related documents, if any, required by Bank in
connection with the issuance thereof (each, a "Letter of Credit
Agreement" and collectively, "Letter of Credit Agreements"). Each
draft paid by Bank under a Letter of Credit shall be deemed
advance under the Line of Credit and shall be repaid by Borrower
in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if the Line
of Credit is not available, for any reason whatsoever, at the
time any draft is paid by Bank, or if advances are not available
under the Line of Credit at such time due to any limitation on
Borrowings set forth herein, then the full amount of such draft
shall be immediately due and payable, together with interest
thereon, from the date such amount is paid by Bank to the date
such amount is fully repaid by Borrower, at the rate of interest
applicable to advances under the Line of Credit. In such event,
Borrower agrees that Bank, at Bank's sole discretion, may debit
Borrower's deposit account with Bank for the amount of any such
draft.
THIS EXHIBIT "A" - COVENANTS IS EXECUTED ON APRIL 8, 1997.
LENDER:[S]▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
National Bank of the Redwoods
BY:[S]▇▇▇▇ ▇▇▇▇▇
Authorized Officer
PROMISSORY NOTE
Borrower: REAL GOODS TRADING CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: National Bank of the Redwoods
Ukiah ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PRINCIPAL AMOUNT: $1,500,000.00 INITIAL RATE: 9.500%
DATE OF NOTE: April 8, 1997
PROMISE TO PAY. REAL GOODS TRADING CORPORATION ("Borrower")
promises to pay to National Bank of the Redwoods ("Lender"), or
order, in lawful money of the United States of America, the
principal amount of One Million Five Hundred Thousand & 00/100
Dollars ($1,500,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the
date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on April
4, 1998. In addition, Borrower will pay regular monthly payments
of accrued unpaid Interest beginning May 4, 1997, and all
subsequent Interest payments are due on the same day of each
month after that. Interest on this Note is computed on a 365/365
simple interest basis; that is, by applying the ratio of the
annual interest rate over the number of days in a year,
multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding.
Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late
charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject
to change from time to time based on changes in an independent
index which is the The West Coast Edition Of The Wall Street
Journal Prime Rate (the "Index"). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the index
becomes unavailable during the term of this loan, Lender may
designate a substitute index after notice to Borrower. Lender
will tell Borrower the current index rate upon Borrower's
request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more
often than each day the prime rate changes. The index currently
Is 8.500% per annum. The interest rate to be paid to the unpaid
principal balance of this Note will be at a rate of 1.000
percentage point over the index, resulting in an initial rate of
9.500% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed
by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid
finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether
voluntary or as a result of default), except as otherwise
required by law. Except for the foregoing, Borrower may pay
without penalty all or a portion of the amount owed earlier than
it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due.
LATE CHARGE. If a payment is 11 days or more late, Borrower will
be charged 5.000% of the regularly scheduled payment or $75.00,
whichever is less.
DEFAULT. Borrower will be in default if any of the following
happens: (a) Borrower fails to make any payment when due. (b)
Borrower breaks any promise Borrower has made to Lender, or
Borrower fails to comply with or to perform when due any other
term, obligation, covenant, or condition contained in this Note
or any agreement related to this Note, or in any other agreement or
loan Borrower has with Lender. (c) Borrower defaults 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 ability to repay this Note or perform Borrower's
obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any
material respect either now or at the time made or furnished. (e)
Borrower becomes insolvent, a receiver is appointed for any part
of Borrower's property, Borrower makes an assignment for the benefit
of creditors, or any proceeding is commenced either by Borrower
or against Borrower under any bankruptcy or insolvency laws. (f) Any
creditor tries to take any of Borrower's property on or in which
Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in
this default section occurs with respect to any guarantor of this
Note. (h) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance
of the Indebtedness is impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Note and all accrued unpaid
interest immediately due, without notice, and then Borrower will
pay that amount. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will
pay Lender 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 and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services.
Borrower also will pay any court costs, in addition to all other
sums provided by law. This Note has been delivered to Lender and
accepted by Lender in the State of California. If there is
lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of MENDOCINO County, the State of
California. This Note shall be governed by and construed in
accordance with the laws of the State of California.
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 this Note
against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances under this Note, as well as directions for payment from
Borrower's accounts, may be requested orally or in writing by
or as provided in this paragraph. Lender may, but need not,
require that all oral requests be confirmed in writing. The
following party or parties are authorized as provided in this
paragraph to request advances under the line of credit until
Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
PRESIDENT; and ▇▇▇▇▇ ▇▇▇▇▇▇, CFO. ANYONE OF THESE PARTIES IS
AUTHORIZED TO REQUEST ADVANCES. Borrower agrees to be liable for
all sums either: (a) advanced in accordance with the instructions
of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or
by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if:
(a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing
business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Lender; or (d)
Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender.
DEFAULT INTEREST RATE-18.00% PER YEAR. Notwithstanding any other
provisions of this note, Borrower acknowledges that in the event
of 04-08-1997 default, the interest rate applied to this
indebtedness will be increased to 18.00%. Borrower will be
notified in writing, with a copy to all guarantors, that an event
of default has occurred and that failure to cure the default will
result in the application of the default interest rate as of a
certain date. That date will be at least seven (7) calendar days
from the date of notification to the Borrower.
LETTER OF CREDIT SUBLIMIT. This line of credit has a sublimit of
$300,000.00 for the issuance of sight import letters of credit as
more fully described in the Business Loan Agreement.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive any applicable
statute of limitations, presentment, demand for payment, protest
and notice of dishonor. Upon any change in the terms of this
Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation
maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and
for any length of time) this loan, or release any party or
guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent
of or notice to anyone. All such parties also agree that Lender
may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE AND
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER: REAL GOODS TRADING CORPORATION
BY:[S]▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
LENDER: National Bank of the Redwoods
BY:[S]▇▇▇▇ ▇▇▇▇▇
Authorized Officer
COMMERCIAL SECURITY AGREEMENT
Borrower: REAL GOODS TRADING CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: National Bank of the Redwoods
Ukiah ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇. ▇▇ ▇▇▇▇▇
THIS COMMERCIAL SECURITY AGREEMENT is entered into between REAL
GOODS TRADING CORPORATION (referred to below as "Grantor"), and
National Bank of the Redwoods (referred to below as "Lender").
For valuable consideration, Grantor grants to Lender a security
Interest In the Collateral to secure the Indebtedness and agrees
that Lender shall have the rights stated in this Agreement with
respect to the Collateral, in addition to all other rights which
Lender may have by law.
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 Commercial
Security Agreement, as this Commercial Security Agreement may be
amended or modified from time to time, together with all exhibits
and schedules attached to this Commercial Security Agreement from
time to time.
Collateral. The word "Collateral" means the following
described properly of Grantor, whether now owned or hereafter
acquired, whether now existing or hereafter arising, and wherever
located:
All Inventory, chattel paper, accounts, equipment, general
intangibles and fixtures, together with the following
specifically described property: Furniture and Mailing List.
In addition, the word "Collateral" includes all the following,
whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
(a) All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and
substitutions for any property described above.
(b) All products and produce of any of the property
described in this Collateral section.
(c) All accounts, general intangibles, instruments,
rents, monies, payments, and all other rights, arising out of a
sale, lease, or other disposition of any of the properly
described in this Collateral section.
(d) All proceeds (including insurance proceeds) from the
sale, destruction, loss, or other disposition of any of the
properly described in this Collateral section.
(e) All records and data relating to any of the properly
described in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic media,
together with all of Grantor's right, title, and interest in and
to all computer software required to utilize, create, maintain,
and process any such records or data on electronic media.
Fixtures are and will be located on the following described real
estate:
PROPERTY LOCATED AT ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; PARCEL NUMBERS' ▇▇▇-▇▇▇-▇▇ AND ▇▇▇-▇▇▇-▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ARE THE RECORD OWNERS OF THE
REAL PROPERTY DESCRIBED ON WHICH THE COLLATERAL IS LOCATED; AND
▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, MENDOCINO COUNTY, APN#[S] ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ IS THE RECORD OWNER OF THE REAL PROPERTY DESCRIBED ON
WHICH THE COLLATERAL IS LOCATED.
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 REAL GOODS TRADING
CORPORATION, its successors and assigns.
Guarantor. The word "Guarantor" means and includes without
limitation each and all of the guarantors, sureties, and
accommodation parties in connection with the Indebtedness.
Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, including all principal and interest,
together with all other indebtedness and costs and expenses for
which Grantor is responsible under this Agreement or under any of
the Related Documents.
Lender. The word "Lender" means National Bank of the
Redwoods, its successors and assigns.
Note. The word "Note" means the note or credit agreement
dated April 8, 1997, in the principal amount of $1,500,000.00
from REAL GOODS TRADING CORPORATION to Lender, together with all
renewals of, extensions of, modifications of, refinancings of,
consolidations of and substitutions for the note or credit
agreement.
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.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual
possessory security interest in and hereby assigns, conveys,
delivers, pledges, and transfers all of Grantor's right, title
and interest in and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts
held jointly with someone else and all accounts Grantor 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. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all
Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender
as follows:
Perfection of Security Interest Grantor agrees to execute
such financing statements and to take whatever other actions are
requested by Lender to perfect and continue Lender's security
interest in the Collateral. Upon request of Lender, Grantor will
deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender's
interest upon any and all chattel paper if not delivered to
Lender for possession by Lender Grantor hereby appoints Lender as
its irrevocable attorney-in-fact for the purpose of executing any
documents necessary to perfect or to continue the security
interest granted in this Agreement. Lender may at any time, and
without further authorization from Grantor, file a carbon,
photographic or other reproduction of any financing statement or
of this Agreement for use as a financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in
the Collateral. Grantor promptly will notify Lender before any
change in Grantor's name including any change to the assumed
business names of Grantor. This is a continuing Security
Agreement and will continue in effect even though all or any part
of the Indebtedness is paid in full and even though for a period
of time Grantor may not be Indebted to Lender.
No Violation. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to
which Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition of
this Agreement.
Enforceability of Collateral. To the extent the Collateral
consists of accounts, chattel paper, or general intangibles, the
Collateral is enforceable in accordance with its terms, is
genuine, and complies with applicable laws concerning form,
content and manner of preparation and execution, and all persons
appearing to be obligated on the Collateral have authority and
capacity to contract and are in fact obligated as they appear to
be on the Collateral. At the time any account becomes subject to
a security interest in favor of Lender, the account shall be a
good and valid account representing an undisputed, bona fide
indebtedness incurred by the account debtor, for merchandise held
subject to delivery instructions or theretofore shipped or
delivered pursuant to a contract of sale, or for services
theretofore performed by Grantor with or for the account debtor,
there shall be no setoffs or counterclaims against any such
account; and no agreement under which any deductions or discounts
may be claimed shall have been made with the account debtor
except those disclosed to Lender in writing.
Location of the Collateral. Grantor, upon request of Lender,
will deliver to Lender in form satisfactory to Lender a schedule
of real properties and Collateral locations relating to Grantor's
operations, including without limitation the following: (a) all
real property owned or being purchased by Grantor; (b) all real
property being rented or leased by Grantor; (c) all storage
facilities owned, rented, leased, or being used by Grantor; and
(d) all other properties where Collateral is or may be located.
Except in the ordinary course of its business, Grantor shall not
remove the Collateral from its existing locations without the
prior written consent of Lender.
Removal of Collateral. Grantor shall keep the Collateral (or
to the extent the Collateral consists of intangible property such
as accounts, the records concerning the Collateral) at Grantor's
address shown above, or at such other locations as are acceptable
to Lender. Some or all of the Collateral may be located at the
real property described above. Except in the ordinary course of
its business, including the sales of inventory, Grantor shall not
remove the Collateral from its existing locations without the
prior written consent of Lender. To the extent that the
Collateral consists of vehicles, or other titled property,
Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside
the State of California, without the prior written consent of
Lender.
Transactions Involving Collateral. Except for inventory sold
or accounts collected in the ordinary course of Grantor's
business, Grantor shall not sell, offer to sell, or otherwise
transfer or dispose of the Collateral. While Grantor is not in
default under this Agreement, Grantor may sell inventory, but
only in the ordinary course of its business and only to buyers
who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a
transfer in partial or total satisfaction of a debt or any bulk
sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior
written consent of Lender. This includes security interests even
if junior in right to the security interests granted under this
Agreement.
Unless waived by Lender, all proceeds from any disposition
of the Collateral (for whatever reason) shall be held in trust
for Lender and shall not be commingled with any other funds;
provided however, this requirement shall not constitute consent
by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it
holds good and marketable title to the Collateral, free and clear
of all liens and encumbrances except for the lien of this
Agreement. No financing statement covering any of the Collateral
is on file in any public office other than those which reflect
the security interest created by this Agreement or to which
Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all
other persons.
Collateral Schedules and Locations. As often as Lender shall
require, and insofar as the Collateral consists of accounts and
general intangibles, Grantor shall deliver to Lender schedules of
such Collateral, including such information as Lender may require
including without limitation names and addresses of account
debtors and agings of accounts and general intangibles. Insofar
as the Collateral consists of inventory and equipment, Grantor
shall deliver to Lender, as often as Lender shall require, such
lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location
of such Collateral. Such information shall be submitted for
Grantor and each of its subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall
maintain all tangible Collateral in good condition and repair.
Grantor will not commit or permit damage to or destruction of the
Collateral or any part of the Collateral. Lender and its
designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral
wherever located. Grantor shall immediately notify Lender of all
cases involving the return, rejection, repossession, loss
or damage of or to any Collateral; of any request for credit or
adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting
the Collateral or the value or the amount of the Collateral.
Taxes, Assessments and Liens. Grantor will pay when due all
taxes, assessments and liens upon the Collateral, its use or
operation, upon this Agreement, upon any promissory note or notes
evidencing the Indebtedness, or upon any of the other Related
Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay and so
long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Grantor shall
deposit with Lender cash, a sufficient corporate surety bond or
other security satisfactory to Lender in an amount adequate to
provide for the discharge of the lien plus any interest, costs,
attorneys' fees or other charges that could accrue as a result of
foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral.
Grantor shall name Lender as an additional obligee under any
surety bond furnished in the contest proceedings.
Compliance With Governmental Requirements. Grantor shall
comply promptly with all laws, ordinances, rules and
regulations of all governmental authorities, now or hereafter in
effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such
law, ordinance or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not
jeopardized.
Hazardous Substances. Grantor represents and warrants that
the Collateral never has been, and never will be so long as this
Agreement remains a lien on the Collateral, used for the
generation, manufacture, storage, transportation, treatment,
disposal, release or threatened release of any hazardous waste or
substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.
99-499 ("▇▇▇▇"), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety
Code, Section 25100, et seq., or other applicable state or
Federal laws, rules, or regulations adopted pursuant to any of
the foregoing. The terms "hazardous waste" and "hazardous
substance" shall also include, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on
Grantor's due diligence in investigating the Collateral for
hazardous wastes and substances.
Grantor hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws,
and (b) agrees to indemnify and hold harmless Lender against any
and all claims and losses resulting from a breach of this
provision of this Agreement. This obligation to indemnify shall
survive the payment of the Indebtedness and the satisfaction of
this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and
maintain all risks insurance, including without limitation
fire, theft and liability coverage together with such other
insurance as Lender may require with respect to the Collateral,
in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable
to Lender. Grantor, 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 cancelled or diminished without at
least ten (10) days' prior written notice to Lender and not
including any disclaimer of the insurer's liability for failure
to give such a notice. 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
Grantor or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security
interest, Grantor will provide Lender with such loss payable or
other endorsements as Lender may require. If Grantor at any time
fails to obtain or maintain any insurance as required under this
Agreement, Lender may (but shall not be obligated to) obtain such
insurance as Lender deems appropriate, including if it so chooses
"single interest insurance," which will cover only Lender's
interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly
notify Lender of any loss or damage to the Collateral. Lender may
make proof of loss if Grantor fails to do so within fifteen (15)
days of the casualty. All proceeds of any insurance on the
Collateral, including accrued proceeds thereon, shall be held by
Lender as part of the Collateral. If Lender consents to repair or
replacement of the damaged or destroyed Collateral, Lender shall,
upon satisfactory proof of expenditure, pay or reimburse Grantor
from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement
of the Collateral, Lender shall retain a sufficient amount of the
proceeds to pay all of the indebtedness, and shall pay the
balance to Grantor. Any proceeds which have not been disbursed
within six (6) months after their receipt and which Grantor has
not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain
with Lender reserves for payment of insurance premiums, which
reserves shall be created by monthly payments from Grantor of a
sum estimated by Lender to be sufficient to produce, at least
fifteen (15) days before the premium due date, amounts at least
equal to the insurance premiums to be paid. If fifteen (15) days
before payment is due, the reserve funds are insufficient,
Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and
shall constitute a non-interest-bearing account which Lender may
satisfy by payment of the insurance premiums required to be paid
by Grantor as they become due. Lender does not hold the reserve
funds in trust for Grantor, and Lender is not the agent of
Grantor for payment of the insurance premiums required to be paid
by Grantor. The responsibility for the payment of premiums shall
remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall
furnish to Lender reports on each existing policy of insurance
showing such information as Lender may reasonably request
including the following: (a) the name of the insurer; (b) the
risks insured; (c) the amount of the policy; (d) the property
insured; (e) the then current value on the basis of which
insurance has been obtained and the manner of determining that
value; and (f) the expiration date of the policy. In addition,
Grantor shall upon request by Lender (however not more often than
annually) have an independent appraiser sabsfactory to Lender
determine, as applicable, the cash value or replacement cost of
the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until
default and except as otherwise provided below with respect to
accounts, Grantor may have possession of the tangible personal
property and beneficial use of all the Collateral and may use it
in any lawful manner not inconsistent with this Agreement or the
Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where
possession of the Collateral by Lender is required by law to
perfect Lender's security interest in such Collateral. Until
otherwise notified by Lender, Grantor may collect any of the
Collateral consisting of accounts. At any bme and even though no
Event of Default exists, Lender may exercise its rights to
collect the accounts and to notify account debtors to make
payments directly to Lender for application to the Indebtedness.
If Lender at any time has possession of any Collateral, whether
before or after an Event of Default, Lender shall be deemed to
have exercised reasonable care in the custody and preservation of
the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender's sole
discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be
deemed to be a failure to exercise reasonable care. Lender shall
not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect,
preserve or maintain any security interest given to secure the
Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due,
Lender may (but shall not be obligated to) discharge or pay any
amounts required to be discharged or paid by Grantor under this
Agreement, including without limitation all taxes, liens,
security interests, encumbrances, and other claims, at any time
levied or placed on the Collateral. Lender also may (but shall
not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid
by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender
to the date of repayment by Grantor. All such expenses shall
become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note
and be apportioned among and be payable with any installment
payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of the
Note, or (c) be treated as a balloon payment which will be due
and payable at the Note's maturity. This Agreement also will
secure payment of these amounts. Such right shall be in addition
to all other rights and remedies to which Lender may be entitled
upon the occurrence of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:
Default on Indebtedness. Failure of Grantor to make any
payment when due on the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to
perform any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents or
in any other agreement between Lender and Grantor.
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 Grantor under
this Agreement, the Note or the Related Documents is false or
misleading in any material respect, either now or at the time
made or furnished.
Detective Collateralization. This Agreement or any of the
Related Documents ceases to be in full force and effect
(including failure of any collateral documents to create a valid
and perfected security interest or lien) at any time and for any
reason.
Insolvency. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor, the
appointment of a receiver for any part of Grantor'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 Grantor.
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 Grantor or by any governmental agency against the
Collateral or any other collateral securing the Indebtedness.
This includes a garnishment of any of Grantor's deposit accounts
with Lender.
Events Affecting Guarantor. Any of the preceding events
occurs with respect to any Guarantor of any of the Indebtedness
or such Guarantor dies or becomes incompetent.
Adverse Change. A material adverse change occurs in
Grantor's financial condition, or Lender believes the prospect of
payment or performance of the Indebtedness is impaired.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs
under this Agreement, at any time thereafter, Lender shall have
all the rights of a secured party under the California Uniform
Commercial Code. In addition and without limitation, Lender may
exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire
Indebtedness, including any prepayment penalty which Grantor
would be required to pay, immediately due and payable, without
notice.
Assemble Collateral. Lender may require Grantor to deliver
to Lender all or any portion of the Collateral and any and all
certificates of title and other documents relating to the
Collateral. Lender may require Grantor to assemble the Collateral
and make it available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the
Collateral. If the Collateral contains other goods not covered by
this Agreement at the time of repossession, Grantor agrees Lender
may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell,
lease, transfer, or otherwise deal with the Collateral or
proceeds thereof in its own name or that of Grantor. Lender may
sell the Collateral at public auction or private sale. Unless the
Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender will give Grantor
reasonable notice of the time after which any private sale or any
other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is
given at least ten (10) days, or such lesser time as required by
state law, before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a
part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of
expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding the
appointment of a receiver: (a) Lender may have a receiver
appointed as a matter of right, (b) the receiver may be an
employee of Lender and may serve without bond, and (c) all fees
of the receiver and his or her attorney shall become part of the
Indebtedness secured by this Agreement and shall be available on
demand, with interest at the Note rate from date of expenditure
until repaid.
Collect Revenues, Apply Accounts. Lender, either itself or
through a receiver, may collect the payments, rents, income, and
revenues from the Collateral. Lender may at any time in its
discretion transfer any Collateral into its own name or that of
its nominee and receive the payments, rents, income, and revenues
therefrom and hold the same as security for the Indebtedness or
apply it to payment of the Indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, chooses in action, or similar
property, Lender may demand, collect, receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose, or realize on the
Collateral as Lender may determine, whether or not Indebtedness
or Collateral is then due. For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts,
money orders, documents of title, instruments and items
pertaining to payment, shipment, or storage of any Collateral. To
facilitate collection, Lender may notify account debtors and
obligators on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of
the Collateral, Lender may obtain a judgment against Grantor for
any deficiency remaining on the Indebtedness due to Lender after
application of all amounts received from the exercise of the
rights provided in this Agreement. Grantor shall be liable for
a deficiency even if the transaction described in this subsection
is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights
and remedies of a secured creditor under the provisions of the
Uniform Commercial Code, as may be amended from time to time. In
addition, Lender shall have and may exercise any or all other
rights and remedies it may have available at law, in equity, or
otherwise.
Cumulative Remedies. All of Lender's rights and remedies,
whether evidenced by this Agreement or the Related Documents or
by any other writing, 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 Grantor under this Agreement, after Grantor's
failure to perform, shall not affect Lender's right to declare a
default and to exercise its 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 manners 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 California. If there is a
lawsuit, Grantor agrees upon Lenders request to submit to the
jurisdiction of the courts of the State of California. This
Agreement shall be governed by and construed in accordance with
the laws of the State of California.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand
all of Lender's costs and expenses, including attorneys' fees and
Lender's legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may pay someone else to
help enforce this Agreement, and Grantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lenders
attorney's fees and legal expenses whether or not there is a
lawsuit, including attorney's fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Grantor also shall pay all
court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
Multiple Parties-Corporate Authority. All obligations of
Grantor under this Agreement shall be joint and several, and all
references to Grantor shall mean each and every Grantor. This
means that each of the persons signing below is responsible for
all obligations in this Agreement.
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 Grantor, notice to any
Grantor will constitute notice to all Grantors. For notice
purposes, Grantor will keep Lender informed at all times of
Grantors current address(es).
Power of Attorney. Grantor hereby appoints Lender as its
true and lawful attorney-in-fact, irrevocably, with full power of
substitution to do the following: (a) to demand collect receive
receipt for ▇▇▇ and recover all sums of money or other property
which may now or hereafter become due, owing or payable from the
Collateral; (b) to execute sign and endorse any and all claims,
instruments receipts checks drafts or warrants issued in payment
for the Collateral; (c) to settle or compromise any and all
claims arising under the Collateral and in the place and stead of
Grantor to execute and deliver its release and settlement for the
claim and (d) to file any claim or claims or to take any action
or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise which in the
discretion of Lender may seem to be necessary or advisable. This
power is given as security for the Indebtedness and the authority
hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
Preference Payments. Any monies Lender pays because of an
asserted preference claim in Borrower's bankruptcy will become a
part of the Indebtedness and at Lender s option shall be payable
by Borrower as provided above in the EXPENDITURES BY LENDER
paragraph.
Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to
any person or circumstance such finding shall not render that
provision invalid or unenforceable as to any other persons or
Circumstances. If feasible any such offending provision shall be
deemed to be modified to be within the limits of enforceability
or validity; however if the offending provision cannot be so
modified it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.
Successor Interests. Subject to the limitations set forth
above on transfer of the Collateral this Agreement shall be
binding upon and inure to the benefit of the parties their
successors and assigns.
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 shall not prejudice or constitute a waiver of Lenders
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 Grantor shall
constitute a waiver of any of Lender's rights or of any of
Grantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement the granting
of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld
in the sole discretion of Lender.
Waiver of Co-obligators Rights. If more than one person is
obligated for the Indebtedness Borrower irrevocably waives
disclaims and relinquishes all claims against such other person
which Borrower has or would otherwise have by virtue of payment
of the Indebtedness or any part thereof specifically including
but not limited to all rights of indemnity contribution or
exoneration.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND GRANTOR AGREES TO ITS TERMS.
THIS AGREEMENT IS DATED APRIL 8 1997.
GRANTOR:
REAL GOODS TRADING CORPORATION
BY:[S]▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, PRESIDENT
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
COMMERCIAL GUARANTY
Borrower: REAL GOODS TRADING CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: National Bank of the Redwoods
Ukiah ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Guarantor: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AMOUNT OF GUARANTY. The principal amount of this Guaranty is One
Million Five Hundred Thousand & 00/100 Dollars ($1,500,000.00).
CONTINUING GUARANTY. For good and valuable consideration, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ("Guarantor") absolutely and unconditionally guarantees
and promises to pay to National Bank of the Redwoods ("Lender")
or its order, in legal tender of the United States of America,
the Indebtedness (as that term is defined below) of REAL GOODS
TRADING CORPORATION ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. The obligations of
Guarantor under this Guaranty are continuing.
DEFINITIONS. The following words shall have the following
meanings when used in this Guaranty:
Borrower. The word "Borrower" means REAL GOODS TRADING
CORPORATION.
Guarantor. The word "Guarantor" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
Guaranty. The word "Guaranty" means this Guaranty made by
Guarantor for the benefit of Lender dated April 8, 1997.
Indebtedness. The word "Indebtedness" is used in its most
comprehensive sense and means and includes any and all of
Borrower's liabilities, obligations, debts, and indebtedness to
Lender, now existing or hereinafter incurred or created,
including, without limitation, all loans, advances, interest,
costs, debts, overdraft indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities of
Borrower, or any of them, and any present or future judgments
against Borrower, or any of them; and whether any such
indebtedness is voluntarily or involuntarily incurred, due or not
due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable
individually or jointly with others, or primarily or secondarily,
or as guarantor or surety; whether recovery on the indebtedness
may be or may become barred or unenforceable against Borrower for
any reason whatsoever; and whether the indebtedness arises from
transactions which may be voidable on account of infancy,
insanity, ultra ▇▇▇▇▇, or otherwise.
Lender. The word "Lender" means National Bank of the
Redwoods, its successors and assigns.
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.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this
Guaranty shall not exceed at any one time the sum of the
principal amount of $1,500,000.00, plus all interest thereon,
plus all of Lender's costs, expenses, and attorneys' fees
incurred in connection with or relating to (a) the collection of
the Indebtedness, (b) the collection and sale of any collateral
for the Indebtedness or this Guaranty, or (c) the enforcement of
this Guaranty. Attorneys' fees include, without limitation,
attorneys' fees whether or not there is a lawsuit, and if there
is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the
amount of the Indebtedness of Borrower to Lender either in the
aggregate or at any one time. If Lender presently holds one or
more guaranties, or hereafter receives additional guaranties from
Guarantor, the rights of Lender under all guaranties shall be
cumulative. This Guaranty shall not (unless specifically provided
below to the contrary) affect or invalidate any such other
guaranties. The liability of Guarantor will be the aggregate
liability of Guarantor under the terms of this Guaranty and any
such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty
shall be open and continuous for so long as this Guaranty remains
in force. Guarantor intends to guarantee at all times the
performance and prompt payment when due, whether at maturity or
earlier by reason of acceleration or otherwise, of all
Indebtedness within the limits set forth in the preceding section
of this Guaranty. Accordingly, no payments made upon the
Indebtedness will discharge or diminish the continuing liability
of Guarantor in connection with any remaining portions of the
Indebtedness or any of the Indebtedness which subsequently arises
or is thereafter incurred or contracted. Any married person who
signs this Guaranty hereby expressly agrees that recourse may be
had against both his or her separate property and community
property.
DURATION OF GUARANTY. This Guaranty will take effect when
received by Lender without the necessity of any acceptance by
Lender, or any notice to Guarantor or to Borrower, and will
continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation
shall have been fully and finally paid and satisfied and all
other obligations of Guarantor under this Guaranty shall have
been performed in full. If Guarantor elects to revoke this
Guaranty, Guarantor may only do so in writing. Guarantor's
written notice of revocation must be mailed to Lender, by
certified mail, at the address of Lender listed above or such
other place as Lender may designate in writing. Written
revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without
limitation, the term "new Indebtedness" does not include
Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later
becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by
Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals,
substitutions or modifications of the Indebtedness. All renewals,
extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this
Guaranty and, specifically will not be considered to be new
Indebtedness. This Guaranty shall bind the estate of Guarantor as
to Indebtedness created both before and after the death or
incapacity of Guarantor, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor
or administrator or other legal representative may terminate this
Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other
guarantor or termination of any other guaranty of the
Indebtedness shall not affect the liability of Guarantor under
this Guaranty. A revocation received by Lender from any one or
more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. It is anticipated that
fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and it is specifically acknowledged and
agreed by Guarantor that reductions in the amount of
Indebtedness, even to zero dollars ($0.00), prior to written
revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty is binding upon
Guarantor and Guarantor's heirs, successors and assigns so long
as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero
dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender,
either before or after any revocation hereof, without notice or
demand and without lessening Guarantor's liability under this
Guaranty, from time to time: (a) prior to revocation as set forth
above, to make one or more additional secured or unsecured loans
to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or
more times the time for payment or other terms of the
Indebtedness or any part of the Indebtedness, including increases
and decreases of the rate of interest on the indebtedness;
extensions may be repeated and may be for longer than the
original loan term; (c) to take and hold security tor the payment
of this Guaranty or the Indebtedness, and exchange, enforce,
waive, subordinate, fail or decide not to perfect, and release
any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to ▇▇▇ or deal
with any one or more of Borrower's sureties, endorsers, or other
guarantors on any terms or in any manner Lender may choose;
(e) to determine how, when and what application of payments and
credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof,
including without limitation, any nonjudicial sale permitted by
the terms of the controlling security agreement or deed of trust,
as Lender in its discretion may determine; (g) to sell, transfer,
assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants to Lender that (a) no representations or agreements
of any kind have been made to Guarantor which would limit or
qualify in any way the terms of this Guaranty; (b) this Guaranty
is executed at Borrower's request and not at the request of
Lender (c) Guarantor has full power right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not
conflict with or result in a default under any agreement or other
instrument binding upon Guarantor and do not result in a
violation of any law, regulation court decree or order applicable
to Guarantor; (e) Guarantor has not and will not, without the
prior written consent of Lender sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or
substantially all of Guarantor's assets, or any interest therein;
(f) upon Lenders request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender,
and all such financial information which currently has been, and
all future financial information which will be provided to Lender
is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the
dates the financial information is provided; (g) no material
adverse change has occurred in Guarantor's financial condition
since the date of the most recent financial statements provided
to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no
litigation, claim, investigation, administrative proceeding or
similar action (including those for unpaid taxes) against
Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of
Borrower; and (j) Guarantor has established adequate means of
obtaining from Borrower on a continuing basis information
regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of
any facts, events, or circumstances which might in any way affect
Guarantor's risks under this Guaranty, and Guarantor further
agrees that, absent a request for information Lender shall have
no obligation to disclose to Guarantor any information or
documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law
Guarantor waives any right to require Lender to (a) make any
presentment protest, demand, or notice of any kind, including
notice of change of any terms of repayment of the Indebtedness,
default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or
surety of Borrower, or the creation of new or additional
Indebtedness; (b) proceed against any person, including Borrower,
before proceeding against Guarantor; (c) proceed against any
collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Guarantor; (d) apply any payments or
proceeds received against the Indebtedness in any order; (e) give
notice of the terms, time, and place of any sale of the
collateral pursuant to the Uniform Commercial Code or any other
law governing such sale; (f) disclose any information about the
Indebtedness, the Borrower, the collateral, or any other
guarantor or surety, or about any action or nonaction of Lender;
or (g) pursue any remedy or course of action in Lender's power
whatsoever.
Guarantor also waives any and all rights or defenses arising by
reason of (h) any disability or other defense of Borrower, any
other guarantor or surety or any other person; (i) the cessation
from any cause whatsoever, other than payment in full, of the
Indebtedness; (j) the application of proceeds of the Indebtedness
by Borrower for purposes other than the purposes understood and
intended by Guarantor and Lender, (k) any act of omission or
commission by Lender which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor
or surety, or the Indebtedness, or the loss or release of any
collateral by operation of law or otherwise; (l) any statute of
limitations in any action under this Guaranty or on the
Indebtedness; or (m) any modification or change in terms of the
Indebtedness, whatsoever, including without limitation, the
renewal, extension acceleration, or other change in the time
payment of the Indebtedness is due and any change in the interest
rate, and including any such modification or change in terms
after revocation of this Guaranty on Indebtedness incurred prior
to such revocation.
Guarantor waives all rights and any defenses arising out of an
election of remedies by Lender even though that election of
remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed Guarantor's
rights of subrogation and reimbursement against Borrower by
operation of Section 580d of the California Code of Civil
Procedure or otherwise.
Guarantor waives all rights and defenses that Guarantor may have
because Borrower's obligation is secured by real property. This
means among other things: (1) Lender may collect from Guarantor
without first foreclosing on any real or personal property
collateral pledged by Borrower. (2) If Lender forecloses on any
real property collateral pledged by Borrower: (A) The amount of
Borrower's obligation may be reduced only by the price for which
the collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price. (B) Lender may
collect from Guarantor even if Lender by foreclosing on the real
property collateral, has destroyed any right Guarantor may have
to collect from Borrower. This is an unconditional waiver of any
rights and defenses Guarantor may have because Borrower's
obligation is secured by real property. These rights and defenses
include, but are not limited to, any rights and defenses based
upon Section 580a, 580bl 580dl or 726 of the Code of Civil
Procedure.
Guarantor understands and agrees that the foregoing waivers are
waivers of substantive rights and defenses to which Guarantor
might otherwise be entitled under state and federal law. The
rights and defenses waived include without limitation, those
provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Guarantor
acknowledges that Guarantor has provided these waivers of rights
and defenses with the intention that they be fully relied upon by
Lender. Until all Indebtedness is paid in full, Guarantor waives
any right to enforce any remedy Lender may have against Borrower
or any other guarantor, surety, or other person, and further,
Guarantor waives any right to participate in any collateral for
the Indebtedness now or hereafter held by Lender.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor
warrants and agrees that each of the waivers set forth above is
made with Guarantor's full knowledge of its significance and
consequences and that, under the circumstances, the waivers are
reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent
permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and
rights of setoff against the moneys, securities or other property
of Guarantor given to Lender by law, Lender shall have, with
respect to Guarantor's obligations to Lender under this Guaranty
and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to
Lender all of Guarantor's right, title and interest in and to,
all deposits, moneys, securities and other property of Guarantor
now or hereafter in the possession of or on deposit with Lender,
whether held in a general or special account or deposit, whether
held jointly with someone else, or whether held for safekeeping
or otherwise, excluding however all IPA, ▇▇▇▇▇, and trust
accounts. Every such security interest and right of setoff may be
exercised without demand upon or notice to Guarantor. No security
interest or right of setoff shall be deemed to have been waived
by any act or conduct on the part of Lender or by any neglect to
exercise such right of setoff or to enforce such security
interest or by any delay in so doing. Every right of setoff and
security interest shall continue in full force and effect until
such right of setoff or security interest is specifically waived
or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees
that the Indebtedness of Borrower to Lender, whether now existing
or hereafter created, shall be prior to any claim that Guarantor
may now have or hereafter acquire against Borrower, whether or
not Borrower becomes insolvent. Guarantor hereby expressly
subordinates any claim Guarantor may have against Borrower, upon
any account whatsoever, to any claim that Lender may now or
hereafter have against Borrower. In the event of insolvency and
consequent liquidation of the assets of Borrower, through
bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and
Guarantor shall be paid to Lender and shall be first applied by
Lender to the Indebtedness of Borrower to Lender. Guarantor does
hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy
of Borrower, provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment
in legal tender of the Indebtedness. If Lender so requests, any
notes or credit agreements now or hereafter evidencing any debts
or obligations of Borrower to Guarantor shall be marked with a
legend that the same are subject to this Guaranty and shall be
delivered to Lender. Guarantor agrees, and Lender hereby is
authorized, in the name of Guarantor, from time to time to
execute and file financing statements and continuation statements
and to execute such other documents and to take such other
actions as Lender deems necessary or appropriate to perfect,
preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Guaranty:
Integration, Amendment. Guarantor warrants, represents and
agrees that this Guaranty, together with any exhibits or
schedules incorporated herein, fully incorporates the agreements
and understandings of Guarantor with Lender with respect to the
subject manner hereof and all prior negotiations, drafts, and
other extrinsic communications between Guarantor and Lender shall
have no evidentiary effect whatsoever. Guarantor further agrees
that Guarantor has read and fully understands the terms of this
Guaranty; Guarantor has had the opportunity to be advised by
Guarantor's attorney with respect to this Guaranty; the Guaranty
fully reflects Guarantor's intentions and parol evidence is not
required to interpret the terms of this Guaranty. Guarantor
hereby indemnifies and holds Lender harmless from all losses,
claims, damages, and costs (including Lender's attorneys' fees)
suffered or incurred by Lender as a result of any breach by
Guarantor of the warranties, representations and agreements of
this paragraph. No alteration or amendment to this Guaranty shall
be effective unless given in writing and signed by the parties
sought to be charged or bound by the alteration or amendment.
Applicable Law. This Guaranty has been delivered to Lender
and accepted by Lender in the State of California. If there is a
lawsuit, Guarantor agrees upon Lender's request to submit to the
jurisdiction of the courts of Mendocino County, State of
California. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon
demand all of Lender's costs and expenses, including attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Guaranty. Lender may pay someone else to help
enforce this Guaranty, and Guarantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all
court costs and such additional fees as may be directed by the
court.
Notices. All notices required to be given by either party to
the other under this Guaranty shall be in writing, may be sent by
telefacsimile, and, except for revocation notices by Guarantor,
shall be effective when actually delivered or when deposited with
a nationally recognized overnight courier, or when 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 or to such other addresses as either party may designate to
the other in writing. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender
as provided above in the section titled "DURATION OF GUARANTY."
If there is more than one Guarantor, notice to any Guarantor will
constitute notice to all Guarantors. For notice purposes,
Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
Interpretation. In all cases where there is more than one
Borrower or Guarantor, then all words used in this Guaranty in
the singular shall be deemed to have been used in the plural
where the context and construction so require; and where there is
more than one Borrower named in this Guaranty or when this
Guaranty is executed by more than one Guarantor, the words
"Borrower" and "Guarantor" respectively shall mean all and any
one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees
of each of them. Caption headings in this Guaranty are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Guaranty. If a court of competent
jurisdiction finds any provision of this Guaranty 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, and all provisions of this
Guaranty in all other respects shall remain valid and
enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the
officers, directors, partners, or agents acting or purporting to
act on their behalf. and any Indebtedness made or created in
reliance upon the professed exercise of such powers shall be
guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights
under this Guaranty 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
Guaranty shall not prejudice or constitute a waiver of Lender's
right otherwise to demand strict compliance with that provision
or any other provision of this Guaranty. No prior waiver by
Lender, nor any course of dealing between Lender and Guarantor,
shall constitute a waiver of any of Lender's rights or of any of
Guarantor's obligations as to any future transactions. Whenever
the consent of Lender is required under this Guaranty, the
granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION,
EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON
GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND
THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE MANNER
SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY
EFFECTIVE. THIS GUARANTY IS DATED APRIL 8.1997.
GUARANTOR:[S]▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, PRESIDENT
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President