<PAGE>
.
.
.
Exhibit 10.35
COMMERCIAL SECURITY AGREEMENT
<TABLE>
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PRINCIPAL LOAN DATE
MATURITY
LOAN
NO
CALL / COLL
ACCOUNT OFFICER
INITIALS
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<S>
<C>
<C>
<C>
<C>
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<C>
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$2,000,000.00
05-14-2004
05-14-2006
77-100239-01
MARK
</TABLE>
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.
Any item above containing "***" has been omitted due to text length
limitations.
GRANTOR: PYRAMID BREWERIES INC.
LENDER: FIRST MUTUAL BANK
91 SOUTH ROYAL BROUGHAM WAY
BUSINESS BANKING
SEATTLE, WA 98134
400 - 108TH AVE NE
PO BOX 1647
BELLEVUE, WA 98009
(425) 453-5301
THIS COMMERCIAL SECURITY AGREEMENT dated May 14, 2004, is made and
executed
between Pyramid Breweries Inc. ("Grantor") and First Mutual Bank
("Lender").
GRANT OF SECURITY INTEREST. 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.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this
Agreement means
the following described property, whether now owned or hereafter
acquired,
whether now existing or hereafter arising, and wherever located, in
which
Grantor is giving to Lender a security interest for the payment of
the
Indebtedness and performance of all other obligations under the
Note and this
Agreement:
All
Inventory, Chattel Paper, Accounts, Equipment and General
Intangibles
In addition, the word "Collateral" also includes all the following,
whether now
owned or hereafter acquired, whether now existing or hereafter
arising, and
wherever located:
(A)
All accessions, attachments, accessories, tools, parts,
supplies,
replacements of and additions to any of the collateral described
herein,
whether added now or later.
(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,
consignment
or
other disposition of any of the property described in this
Collateral
section.
(D)
All proceeds (including insurance proceeds) from the sale,
destruction,
loss, or other disposition of any of the property described in
this
Collateral section, and sums due from a third party who has damaged
or
destroyed the Collateral or from that party's insurer, whether due
to
judgment, settlement or other process.
(E)
All records and data relating to any of the property 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.
Despite any other provision of this Agreement, Lender is not
granted, and will
not have, a nonpurchase money security interest in household goods,
to the
extent such a security interest would be prohibited by applicable
law. In
addition, if because of the type of any Property, Lender is
required to give a
notice of the right to cancel under Truth in Lending for the
Indebtedness, then
Lender will not have a security interest in such Collateral unless
and until
such a notice is given.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender
reserves a
right of setoff in all Grantor's accounts with Lender (whether
checking,
savings, or some other account). This includes all accounts Grantor
holds
jointly with someone else and all accounts Grantor may open in the
future.
However, this does not include any IRA or Keogh accounts, or any
trust accounts
for which setoff would be prohibited by law. Grantor 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, and, at Lender's
option, to
administratively freeze all such accounts to allow Lender to
protect Lender's
charge and setoff rights provided in this paragraph.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL. With
respect to the Collateral, Grantor represents and promises to
Lender that:
PERFECTION OF SECURITY INTEREST. Grantor agrees to take whatever
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
and
instruments if not delivered to Lender for possession by Lender.
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.
NOTICES TO LENDER.
Grantor will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender
may
designate from time to time) prior to any (1) change in Grantor's
name; (2)
change in Grantor's assumed business name(s); (3) change in the
management
of
the Corporation Grantor; (4) change in the authorized signer(s);
(5)
change in Grantor's principal office address; (6) Change in
Grantor's state
of
organization; (7) conversion of Grantor to a new or different type
of
business entity; No change in Grantor's name or state of
organization will
take
effect until after Lender has received notice.
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, as defined by the
Uniform
Commercial Code, the Collateral is enforceable in accordance with
its
terms, is genuine, and fully complies with all applicable laws
and
regulations 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 bonafide indebtedness incurred by the
account
debtor, for merchandise held subject to delivery instructions or
previously
shipped or delivered pursuant to a contract of sale, or for
services
previously performed by Grantor with or for the account debtor. So
long as
this
Agreement remains in effect. Grantor shall not, without Lender's
prior
written consent, **
See Page 5 compromise, settle, adjust, or extend
payment under or with regard to any such Accounts. There shall be
no
setoffs or counterclaims against any of the Collateral, and no
agreement
shall have been made under which any deductions or discounts may be
claimed
concerning the Collateral except those disclosed to Lender in
writing.
LOCATION OF THE COLLATERAL. Except in the ordinary course of
Grantor's
business, Grantor agrees to keep the Collateral (or to the extent
the
Collateral consists of intangible property such as accounts or
general
intangibles, the records concerning the Collateral) at Grantor's
address
shown above or at such other locations as are acceptable to Lender.
Upon
Lender's request,
Grantor 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:
(1) all
real
property Grantor owns or is purchasing; (2) all real property
Grantor
is
renting or leasing; (3) all storage facilities Grantor owns,
rents,
leases, or uses; and (4) all other properties where Collateral is
or may be
located.
<PAGE>
COMMERCIAL SECURITY AGREEMENT
LOAN NO: 77-100239-01
(CONTINUED)
PAGE 2
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.
REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and
to cause
others to keep and maintain, the Collateral in good order, repair
and
condition at all times while this Agreement remains in effect.
Grantor
further agrees to pay when due all claims for work done on, or
services
rendered or material furnished in connection with the Collateral so
that no
lien
or encumbrance may ever attach to or be filed against the
Collateral.
INSPECTION OF COLLATERAL. Lender and Lender's designated
representatives
and
agents shall have the right at all reasonable times to examine
and
inspect the Collateral wherever located.
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. Grantor further agrees to furnish Lender with evidence
that
such
taxes, assessments, and governmental and other charges have been
paid
in
full and in a timely manner. 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.
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, including all
laws or
regulations relating to the undue erosion of highly-erodible land
or
relating to the conversion of wetlands for the production of an
agricultural product or commodity. 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 in violation of any Environmental Laws or for
the
generation, manufacture, storage, transportation, treatment,
disposal,
release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on
Grantor's due
diligence in investigating the Collateral for Hazardous Substances.
Grantor
hereby (1) 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 Environmental Laws, and (2) 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 thirty (30) 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
Lender 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: (1) the name
of the
insurer; (2) the risks insured; (3) the amount of the policy; (4)
the
property insured; (5) the then current value on the basis of
which
insurance has been obtained and the manner of determining that
value; and
(6)
the expiration date of the policy. In addition, Grantor shall
upon
request by Lender (however not more often than annually) have
an
independent appraiser satisfactory to Lender determine, as
applicable, the
cash
value or replacement cost of the Collateral.
FINANCING STATEMENTS. Grantor authorizes Lender to file a UCC
financing
statement, or alternatively, a copy of this Agreement to perfect
Lender's
security interest. At Lender's request, Grantor additionally agrees
to sign
all
other documents that are necessary to perfect, protect, and
continue
Lender's security interest in the Property. Grantor will pay all
filing
fees, title transfer fees, and other fees and costs involved
unless
prohibited by law or unless Lender is required by law to pay such
fees and
costs. Grantor irrevocably appoints Lender to execute documents
necessary
to
transfer title if there is a default. Lender may file a copy of
this
Agreement as a financing statement. If Grantor changes Grantor's
name or
address, or the name or address of any person granting a security
interest
under this Agreement changes, Grantor will promptly notify the
Lender of
such
change.
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 time and Event of
<PAGE>
COMMERCIAL SECURITY AGREEMENT
LOAN NO: 77-100239-01
(CONTINUED)
PAGE 3
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
Default.
DEFAULT. Each of the following shall constitute an Event of Default
under this
Agreement:
PAYMENT DEFAULT. Grantor fails to make any payment when due under
the
Indebtedness.
OTHER DEFAULTS. Grantor fails 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 to comply with or to perform any term,
obligation,
covenant or condition contained 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 Grantor's property or Grantor's or
any
Grantor's ability to repay the Indebtedness 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 Grantor or on Grantor's behalf under this
Agreement
or
the Related Documents is false or misleading in any material
respect,
either now or 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
collateral
document 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 any collateral securing the
Indebtedness. This
includes a garnishment of any of Grantor's accounts, including
deposit
accounts, with Lender. However, this Event of Default shall not
apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor
or
forfeiture proceeding and if Grantor gives Lender written notice of
the
creditor or forfeiture proceeding and deposits with Lender monies
or a
surety bond for the creditor or forfeiture proceeding, in an
amount
determined by Lender, in its sole discretion, as being an adequate
reserve
or
bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect
to
any guarantor, endorser, surety, or accommodation party of any of
the
Indebtedness or guarantor, endorser, surety, or accommodation party
dies or
becomes incompetent or revokes or disputes the validity of, or
liability
under, any Guaranty of the Indebtedness.
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.
CURE
PROVISIONS. If any default, other than a default in payment is
curable
and if Grantor has not
been given a notice of a breach of the same
provision of this Agreement within the preceding twenty-four (24)
months,
it
may be cured if Grantor, after receiving written notice from
Lender
demanding cure of such default: (1) cures the default within
fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days,
immediately
initiates steps which Lender deems in Lender's sole discretion to
be
sufficient to cure the default and thereafter continues and
completes all
reasonable and necessary steps sufficient to produce compliance as
soon as
reasonably practical.
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 Washington 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 of any kind to
Grantor.
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 Lender's
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, and other persons as required by law, reasonable notice
of
the
time and place of any public sale, or the time after which any
private
sale
or any other disposition of the Collateral is to be made. However,
no
notice need be provided to any person who, after Event of Default
occurs,
enters into and authenticates an agreement waiving that person's
right to
notification of sale. The requirements of reasonable notice shall
be met if
such
notice is given at least ten (10) days 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. Lender shall have the right to have a receiver
appointed
to
take possession of all or any part of the Collateral, with the
power to
protect and preserve the Collateral, to operate the Collateral
preceding or
pending foreclosure or sale, and to collect the Rents from the
Collateral
and
apply the proceeds, over and above the cost of the
receivership,
against the Indebtedness. The receiver may serve without bond if
permitted
by
law. Lender's right to the appointment of a receiver shall exist
whether
or
not the apparent value of the Collateral exceeds the Indebtedness
by a
substantial amount. Employment by Lender shall not disqualify a
person from
serving as a receiver.
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 Lender's discretion transfer
any
Collateral into Lender's own name or that of Lender's 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, choses in action, or similar property, Lender may
demand,
collect, receipt for, settle, compromise, adjust, sue 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
obligors 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.
<PAGE>
COMMERCIAL
SECURITY AGREEMENT
LOAN NO: 77-100239-01
(CONTINUED)
PAGE 4
proceedings (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.
GOVERNING LAW. This Agreement will be governed by, construed and
enforced
in
accordance with federal law and the laws of the State of
Washington.
This
Agreement has been accepted by Lender in the State of
Washington.
CHOICE OF VENUE. If there is a lawsuit, Grantor agrees upon
Lender's
request to submit to the jurisdiction of the courts or King County,
State
of
Washington.
PREFERENCE PAYMENTS. Any monies Lender pays because of an
asserted
preference claim in Grantor's bankruptcy will become a part of
the
Indebtedness and, at Lender's option, shall be payable by Grantor
as
provided in this Agreement.
NO
WAIVER BY LENDER. 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 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.
NOTICES. Subject to applicable law, and except for notice required
or
allowed by law to be given in another manner, any notice required
to be
given under this Agreement shall be given in writing, and shall
be
effective when actually delivered, when actually received by
telefacsimile
(unless otherwise required by law), when deposited with a
nationally
recognized overnight courier, or, if mailed, when deposited in the
United
States mail, as first class, certified or registered mail postage
prepaid,
directed to the addresses shown near the beginning of this
Agreement. 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. For notice purposes, Grantor
agrees to keep Lender informed at all times of Grantor's current
address.
Subject to applicable law, and except for notice required or
allowed by law
to
be given in another manner, if there is more than one Grantor,
any
notice given by Lender to any Grantor is deemed to be notice given
to all
Grantors.
POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's
irrevocable
attorney-in-fact for the purpose of executing any documents
necessary to
perfect, amend, or to continue the security interest granted in
this
Agreement or to demand termination of filings of other secured
parties.
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.
WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated
for the
Indebtedness, Grantor irrevocably waives, disclaims and
relinquishes all
claims against such other person which Grantor 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.
SEVERABILITY. If a court of competent jurisdiction finds any
provision of
this
Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision
illegal,
invalid, or unenforceable as to any other circumstance. If
feasible, the
offending provision shall be considered modified so that it becomes
legal,
valid and enforceable. If the offending provision cannot be so
modified, it
shall be considered deleted from this Agreement. Unless otherwise
required
by
law, the illegality, invalidity, or unenforceability of any
provision of
this
Agreement shall not affect the legality, validity or enforceability
of
any
other provision of this Agreement.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Agreement
on
transfer of Grantor's interest, this Agreement shall be binding
upon and
inure to the benefit of the parties, their successors and assigns.
If
ownership of the Collateral becomes vested in a person other than
Grantor,
Lender, without notice to Grantor, may deal with Grantor's
successors with
reference to this Agreement and the Indebtedness by way of
forbearance or
extension without releasing Grantor from the obligations of this
Agreement
or
liability under the Indebtedness.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations,
warranties, and agreements made by Grantor in this Agreement shall
survive
the
execution and delivery of this Agreement, shall be continuing
in
nature, and shall remain in full force and effect until such time
as
Grantor's Indebtedness shall be paid in full.
TIME
IS OF THE ESSENCE. Time is of the essence in the performance of
this
Agreement.
WAIVE JURY. ALL parties to this Agreement hereby waive the right to
any
jury
trial in any action, proceeding, or counterclaim brought by any
party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have
the following
meanings when used in this Agreement. Unless specifically stated to
the
contrary, all references to dollar amounts shall mean amounts in
lawful money of
the United States of America. Words and terms used in the singular
shall include
the plural, and the plural shall include the singular, as the
context may
require. Words and terms not otherwise defined in this Agreement
shall have the
meanings attributed to such terms in the Uniform Commercial
Code:
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.
BORROWER. The word "Borrower" means Pyramid Breweries Inc. and
includes all
co-signers and co-makers signing the Note.
COLLATERAL. The word "Collateral" means all of Grantor's right,
title and
interest in and to all the Collateral as described in the
Collateral
Description section of this Agreement.
DEFAULT. The word "Default" means the Default set forth in this
Agreement
in
the section titled "Default".
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all
state,
federal and local statutes, regulations and ordinances relating to
the
protection of human health or the environment, including without
limitation
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
("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section
1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C.
Section 6901, et seq., or other applicable state or federal laws,
rules, or
regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the
events of
default set forth in this Agreement in the default section of
this
Agreement.
GRANTOR. The word "Grantor" means Pyramid Breweries Inc..
GUARANTY. The word "Guaranty" means the guaranty from guarantor,
endorser,
surety, or accommodation party to Lender, including without
limitation a
guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean
materials that,
because of their quantity, concentration or physical,
<PAGE>
COMMERCIAL SECURITY AGREEMENT
LOAN NO: 77-100239-01
(CONTINUED)
PAGE 5
agreements, guaranties, security agreements, mortgages, deeds of
trust,
security deeds, collateral mortgages, and all other instruments,
agreements
and documents, whether
now or hereafter existing, executed in connection
with
the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 14,
2004.
GRANTOR:
PYRAMID BREWERIES INC.
By: /s/ JAMES K. HILGER
---------------------------------
JAMES K.
HILGER, CFO & SECRETARY
OF PYRAMID
BREWERIES INC.
(ILLEGIBLE DATA)
** except in the
ordinary course of its business, and where doing so would not
cause a
<PAGE>
PROMISSORY NOTE
<TABLE>
<CAPTION>
PRINCIPAL LOAN DATE
MATURITY
LOAN
NO
CALL / COLL
ACCOUNT OFFICER
INITIALS
-------------
----------
----------
------------
-----------
------- -------
--------
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
$2,000,000.00
05-14-2004
05-14-2006
77-100239-01
MARK
</TABLE>
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.
Any item above containing "***" has been omitted due to text length
limitations.
BORROWER: PYRAMID BREWERIES INC.
LENDER: FIRST MUTUAL BANK
91 SOUTH ROYAL BROUGHAM WAY
BUSINESS BANKING
SEATTLE, WA 98134
400 - 108TH AVE NE
PO BOX 1647
BELLEVUE, WA 98009
(425) 453-5301
<TABLE>
<S>
<C>
<C>
PRINCIPAL AMOUNT: $2,000,000.00 INITIAL RATE: 4.250%
DATE OF NOTE:
May 14, 2004
</TABLE>
PROMISE TO PAY. Pyramid Breweries Inc. ("Borrower") promises to pay
to First
Mutual Bank ("Lender"}, or order, in lawful money of the United
States of
America, the principal amount of Two Million & 00/100 Dollars
($2,000,000.00) 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 May 14, 2006. In addition,
Borrower will pay
regular monthly payments of all accrued unpaid interest due as of
each payment
date, beginning July 1, 2004, with all subsequent interest payments
to be due on
the same day of each month after that. Unless otherwise agreed or
required by
applicable law, payments will be applied first to any accrued
unpaid interest;
then to principal; and then to any late charges. The annual
interest rate for
this Note is computed on a 365/360 basis; that is, by applying the
ratio of the
annual interest rate over a year of 360 days, 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.
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
prime rate as
published in "The Wall Street Journal" (the "Index"). The Index is
not
necessarily the lowest rate charged by Lender on its loans. If the
Index becomes
unavailable during the term or this loan, Lender may designate a
substitute
index after notice to Borrower. Lender will tell Borrower the
current Index rate
upon Borrower's request. The interest rate change will not occur
more often than
each day following a change in the prime rate as published in The
Wall Street
Journal. Borrower understands that Lender may make loans based on
other rates as
well. The Index currently is 4.000% per annum. The interest rate to
be applied
to the unpaid principal balance of this Note will be at a rate of
0.250
percentage points over the Index, resulting in an initial rate of
4.250% 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, early payments will reduce the principal balance due.
Borrower agrees
not to send Lender payments marked "paid in full", "without
recourse", or
similar language. If Borrower sends such a payment, Lender may
accept it without
losing any of Lender's rights under this Note, and Borrower will
remain
obligated to pay any further amount owed to Lender. All written
communications
concerning disputed amounts, including any check or other payment
instrument
that indicates that the payment constitutes "payment in full" of
the amount owed
or that is tendered with other conditions or limitations or as full
satisfaction
of a disputed amount must be mailed or delivered to: First Mutual
Bank, P.O. Box
1647, 400 108th Ave NE Bellevue, WA 98009.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be
charged
5.000% of the regularly scheduled payment or $25.00, whichever is
greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon
final
maturity, Lender, at its option, may, if permitted under applicable
law,
increase the variable interest rate on this Note to 18.000% per
annum. The
interest rate will not exceed the maximum rate permitted by
applicable law.
DEFAULT. Each of the following shall constitute an event of default
("Event of
Default") under this Note:
PAYMENT DEFAULT. Borrower fails to make any payment when due under
this
Note.
OTHER DEFAULTS. Borrower fails to comply with or to perform any
other term,
obligation, covenant or condition contained in this Note or in any
or the
related documents or to comply with or to perform any term,
obligation,
covenant or condition contained in any other agreement between
Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor 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.
FALSE STATEMENTS. Any warranty, representation or statement made
or
furnished to Lender by Borrower or on Borrower's behalf under this
Note or
the
related documents is false or misleading in any material
respect,
either now or at the time made or furnished or becomes false or
misleading
at
any time thereafter.
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 or by
any
governmental agency against any collateral securing the loan. This
includes
a
garnishment of any of Borrower's accounts, including deposit
accounts,
with
Lender. However, this Event of Default shall not apply if there is
a
good
faith dispute by Borrower as to the validity or reasonableness of
the
claim which is the basis of the creditor or forfeiture proceeding
and if
Borrower gives Lender written notice of the creditor or
forfeiture
proceeding and deposits with Lender monies or a surety bond for
the
creditor or forfeiture proceeding, in an amount determined by
Lender, in
its
sole discretion, as being an adequate reserve or bond for the
dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect
to
any guarantor, endorser, surety, or accommodation party of any of
the
indebtedness or any guarantor, endorser, surety, or accommodation
party
dies
or becomes incompetent, or revokes or disputes the validity of,
or
liability under, any guaranty of the indebtedness evidenced by this
Note.
In
the event of a death, Lender, at its option, may, but shall not
be
required to, permit the guarantor's estate to assume
unconditionally the
obligations arising under the guaranty in a manner satisfactory to
Lender,
and,
in doing so, cure any Event of Default.
ADVERSE CHANGE. A material adverse change occurs in Borrower's
financial
condition, or Lender believes the prospect of payment or
performance of
this
Note is impaired.
CURE
PROVISIONS. If any default, other than a default in payment is
curable
and
if Borrower has not been given a notice of a breach of the same
provision of this Note within the preceding twenty-four (24)
months, it may
be
cured if Borrower, after receiving written notice from Lender
demanding
cure
of such default: (1) cures the default within fifteen (15) days;
or
(2)
if the cure requires more than fifteen (15) days, immediately
initiates
steps which Lender deems in Lender's sole discretion to be
sufficient to
cure
the default and thereafter continues and completes all reasonable
and
necessary steps sufficient to produce compliance as soon as
reasonably
practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal
balance on this Note and all accrued unpaid interest immediately
due, and then
Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to
help collect
this Note if Borrower does not pay. Borrower 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, expenses for bankruptcy proceedings (including
efforts to
modify or vacate any automatic stay or injunction), and appeals. If
not
prohibited by applicable law, Borrower also will pay any court
costs, in
addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury
trial in any
action, proceeding, or counterclaim brought by either Lender or
Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and
enforced in
accordance with federal law and the laws of the State of
<PAGE>
PROMISSORY NOTE
LOAN NO: 77-100239-01
(CONTINUED)
PAGE 2
Washington. This Note has been accepted by Lender in the State of
Washington.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon
Lender's request to
submit to the jurisdiction of the courts of King County, State of
Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $22.00 If
Borrower
makes a payment on Borrower's loan and the check or preauthorized
charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law. Lender
reserves a
right of setoff in all Borrower's accounts with Lender (whether
checking,
savings, or some other account). This includes all accounts
Borrower holds
jointly with someone else and all accounts Borrower may open in the
future.
However, this does not include any IRA or Keogh accounts, or any
trust accounts
for which setoff 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, and, at Lender's
option, to
administratively freeze all such accounts to allow Lender to
protect Lender's
charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by the
following
collateral described in the security instrument listed herein:
inventory,
chattel paper, accounts, equipment and general intangibles
described in a
Commercial Security Agreement dated May 14, 2004.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances under
this Note may be requested either orally or in writing by Borrower
or as
provided in this paragraph. Lender may, but need not. require that
all oral
requests be confirmed in writing. All communications, instructions,
or
directions by telephone or otherwise to Lender are to be directed
to Lender's
office shown above. The following person currently is authorized to
request
advances and authorize payments under the line of credit until
Lender receives
from Borrower, at Lender's address shown above, written notice of
revocation of
his or her authority: James K. Hilger. 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.
PENALTY FOR NOT REPORTING FINANCIAL INFORMATION TIMELY. If the
Financial
Information which is described in more detail in the Business Loan
Agreement or
Commercial Guaranty is not received within ninety (90) days of the
due date, the
Lender reserves the right to increase the current Note rate by
one-half percent
(0.50%) per annum, until the required Financial Information is
received.
ANNUAL LINE OF CREDIT CLEANUP. Borrower agrees to pay line of
credit to $0.00
for 30 consecutive days at least once per loan year. (12-month
period commencing
on the date of this Note).
AUTOMATIC PAYMENT REQUIREMENT. Borrower agrees to make the monthly
loan payments
under the terms of the Promissory Note from a First Mutual Bank
deposit account
as long as there is an outstanding balance owed under the terms of
the
Promissory Note or in the event the Promissory Note evidences a
line of credit.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and
upon Borrower's heirs, personal representatives, successors and
assigns, and
shall inure to the benefit of Lender and its successors and
assigns.
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
presentment, demand for payment, 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. The
obligations
under this Note are joint and several.
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.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.
BORROWER:
PYRAMID BREWERIES INC.
By: /s/ JAMES K. HILGER
---------------------------------
JAMES K.
HILGER, CFO & SECRETARY
OF PYRAMID
BREWERIES INC.
(ILLEGIBLE DATA)
<PAGE>
BUSINESS LOAN AGREEMENT (ASSET BASED)
<TABLE>
<CAPTION>
PRINCIPAL LOAN DATE
MATURITY
LOAN
NO
CALL / COLL
ACCOUNT OFFICER
INITIALS
-------------
----------
----------
------------
-----------
------- -------
--------
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
$2,000,000.00
05-14-2004
05-14-2006
77-100239-01
MARK
</TABLE>
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.
Any item above containing "***" has been omitted due to text length
limitations.
BORROWER: PYRAMID BREWERIES INC.
LENDER: FIRST MUTUAL BANK
91 SOUTH
ROYAL BROUGHAM WAY
BUSINESS BANKING
SEATTLE, WA 98134
400 - 108TH AVE NE
PO BOX 1647
BELIEVUE, WA 98009
(425) 453-5301
THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated May 14, 2004, is
made and
executed between Pyramid Breweries Inc. ("Borrower") and First
Mutual Bank
("Lender") 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 or other financial accommodations, including those which may
be described
on any exhibit or schedule attached to this Agreement ("Loan").
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 remain subject to
the terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of May 14, 2004, and
shall continue
in full force and effect until such time as all of Borrower's Loans
in favor of
Lender have been paid in full, including principal, interest,
costs, expenses,
attorneys' fees, and other fees and charges, or until such time as
the parties
may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following person currently is authorized to
request
advances and authorize payments under the line of credit until
Lender receives
from Borrower, at Lender's address shown above, written notice of
revocation of
his or her authority: JAMES K. HILGER.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from
time to time
from the date of this Agreement to the Expiration Date, provided
the aggregate
amount of such Advances outstanding at any time does not exceed the
Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially
or wholly
prepay, and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
any
Advance to or for the account of Borrower under this Agreement is
subject
to
the following conditions precedent, with all documents,
instruments,
opinions, reports, and other items required under this Agreement to
be in
form
and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and
all
Related Documents have been duly authorized, executed, and
delivered
by Borrower to Lender.
(2) Lender shall have received such opinions of counsel,
supplemental
opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been
duly
authorized, created, and perfected with first lien priority and
shall
be in full force and effect.
(4) All guaranties required by Lender for the credit
facility(ies)
shall have been executed by each Guarantor, delivered to Lender,
and
be in full force and effect.
(5) Prior to the initial Advance, Lender, at its option and for
its
sole benefit, shall have conducted an audit of Borrower's
Accounts,
books, records, and operations, and Lender shall be satisfied as
to
their condition.
(6) Borrower shall have paid to Lender all fees, costs, and
expenses
specified in this Agreement and the Related Documents as are then
due
and payable.
MAKING LOAN ADVANCES. Advances under this credit facility, as well
as
directions for payment from Borrower's accounts, may be requested
orally or
in
writing by authorized persons. Lender may, but need not, require
that
all
oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the
benefit
of
Borrower (1) when credited to any deposit account of Borrower
maintained
with
Lender or (2) when advanced in accordance with the instructions of
an
authorized person. Lender, at its option, may set a cutoff time,
after
which all requests for Advances will be treated as having been
requested on
the
next succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal
amount of
the
outstanding Advances shall exceed the applicable Borrowing
Base,
Borrower, immediately upon written or oral notice from Lender,
shall pay to
Lender an amount equal to the difference between the outstanding
principal
balance of the Advances and the Borrowing Base. On the Expiration
Date,
Borrower shall pay to Lender in full the aggregate unpaid principal
amount
of
all Advances then outstanding and all accrued unpaid interest,
together
with
all other applicable fees, costs and charges, if any, not yet
paid.
LOAN
ACCOUNT. Lender shall maintain on its books a record of account
in
which Lender shall make entries for each Advance and such other
debits and
credits as shall be appropriate in connection with the credit
facility.
Lender shall provide Borrower with periodic statements of
Borrower's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to
the
contrary within thirty (30) days after Borrower's receipt of any
such
statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and
performance of
all other Loan, obligations and duties owed by Borrower to Lender,
Borrower (and
others, if required) shall grant to Lender Security Interests in
such property
and assets as Lender may require. Lender's Security Interests in
the Collateral
shall be continuing liens and shall include the proceeds and
products of the
Collateral, including without limitation the proceeds of any
insurance. With
respect to the Collateral, Borrower agrees and represents and
warrants to
Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute all
documents
perfecting Lender's Security Interest and to take whatever actions
are
requested by Lender to perfect and continue Lender's Security
Interests in
the
Collateral. Upon request of Lender, Borrower will deliver to Lender
any
and
all of the documents evidencing or constituting the Collateral,
and
Borrower will note Lender's interest upon any and all chattel paper
and
instruments if not delivered to Lender for possession by
Lender.
Contemporaneous with the execution of this Agreement, Borrower will
execute
one
or more UCC financing statements and any similar statements as may
be
required by applicable law, and Lender will file such financing
statements
and
all such similar statements in the appropriate location or
locations.
Borrower hereby appoints Lender as its irrevocable attorney-in-fact
for the
purpose of executing any documents necessary to perfect or to
continue any
Security Interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile,
or other
reproduction of any financing statement for use as a financing
statement.
Borrower will reimburse Lender for all expenses for the
perfection,
termination, and the continuation of the perfection of Lender's
security
interest in the Collateral. Borrower promptly will notify Lender
before any
change in Borrower's name including any change to the assumed
business
names of Borrower. Borrower also promptly will notify Lender before
any
change in Borrower's Social Security Number or Employer
Identification
Number. Borrower further agrees to notify Lender in writing prior
to any
change in address or location of Borrower's principal governance
office or
should Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter
shall,
keep
correct and accurate records of the Collateral, all of which
records
shall be available to Lender or Lender's representative upon demand
for
inspection and copying at any reasonable time. With respect to
the
Accounts, B
