Exhibit 10.0
PROMISSORY NOTE
Borrower: Scott's Liquid Gold-Inc. (TIN: 84-0920811)
4880 Havana St.
Denver, CO 80239
Lender: Citywide Banks
PO Box 128
Aurora, CO 80040-0128
(303) 365-3600
Principal Amount: $5,156,641.00
Initial Rate: 8.000%
Date of Note: June 7, 2006
PROMISE TO PAY. Scott's Liquid Gold-Inc. ("Borrower") promises
to pay to Citywide Banks ("Lender"), or order, in lawful money
of the United States of America, the principal amount of Five
Million One Hundred Fifty-six Thousand Six Hundred Forty-one &
00/100 Dollars ($5,156,641.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal
balance of each advance.
PAYMENT. Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on
December 7, 2006. In addition, Borrower will pay regular monthly
payments of all accrued unpaid interest due as of each payment
date, beginning July 7, 2006, 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; then to any unpaid collection costs; 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 Lenders 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 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 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. The
interest rate change will not occur more often than each Day.
Borrower understands that Lender may make loans based on other
rates as well. The Index currently is 8.000% per annum. The
interest rate to be applied to the unpaid principal balance of
this Note will be at a rate equal to the Index, resulting in an
initial rate of 8.000% per annum. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum
rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. 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. In any event, even upon
full prepayment of this Note, Borrower understands that Lender
is entitled to a minimum Interest charge of $25.00. Other than
Borrower's obligation to pay any minimum interest charge, 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: Citywide Banks, P0 Box 128,
Aurora, CO 80040-0128.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be
charged 5.000% of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon
final maturity, at Lender's option, and if permitted by applicable
law, Lender may add any unpaid accrued interest to principal and such
sum will bear interest therefrom until paid at the rate provided in
this Note (including any increased rate). Upon default, Lender, at
its option, may, if permitted under applicable law, increase the
variable interest rate on this Note to 21.000% 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 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 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.
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 this Note is impaired,
Insecurity. Lender in good faith believes itself insecure.
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 the reasonable costs of such collection. 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 without limitation attorneys' fees and legal 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 federal law applicable
to Lender and, to the extent not preempted by federal law, the laws
of the State of Colorado without regard to its conflicts of law
provisions. This Note has been accepted by Lender in the State of
Colorado.
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.
LINE OF CREDIT. This Note evidences a straight line of credit.
Once the total amount of principal has been advanced, Borrower
is not entitled to further loan advances. Advances under this
Note, as well as directions for payment from Borrower's accounts,
may be requested orally or in writing by Borrower or by an
authorized person, Lender may, but need not require that all oral
requests be confirmed in writing. 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; (D) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender;
or (E) Lender in good faith believes itself insecure.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and Borrower's heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its
successors and assigns.
Notify Us of Inaccurate Information We Report to Consumer Reporting
Agencies. Please notify us if we report any inaccurate information
about your account(s) to a consumer reporting agency. Your written
notice describing the specific inaccuracy(ies) should be sent to us
at the following address: Citywide Banks Operations Center,
PO Box 128, Aurora, CO 80040-0128.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this
fact will not affect the rest of the Note. 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:
SCOTT'S LIQUID GOLD-INC.
BY: /s/ Mark E. Goldstein
--------------------------------------
Mark E. Goldstein, CEO and President
of Scott's Liquid Gold-Inc.
BUSINESS LOAN AGREEMENT
Borrower: Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, CO 80239
Lender: Citywide Banks
PO Box 128
Aurora, CO 80040-0128
(303) 365-3600
THIS BUSINESS LOAN AGREEMENT dated June 7, 2006, is made and executed
between Scott's Liquid Gold-Inc. ("Borrower") and Citywide Banks
"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 June 7, 2006, 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 June 7, 2021.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
the initial Advance and each subsequent 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 the following
documents for the Loan: (1) the Note; (2) Security Agreements
granting to Lender security interests in the Collateral;
(3) financing statements and all other documents perfecting
Lender's Security Interests; (4) evidence of insurance as required
below; (5) together with all such Related Documents as Lender may
require for the Loan; all in form and substance satisfactory to
Lender and Lender's counsel.
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, In addition, Borrower shall have
provided such other resolutions, authorizations, documents and
instruments as Lender or its counsel, 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 or under any Related Document.
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 for profit which is, and at
all times shall be, duly organized, validly existing, and in good
standing under and by virtue of the laws of the State of Colorado.
Borrower is duly authorized to transact business in all other states
in which Borrower is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which
Borrower is doing business. Specifically, Borrower is, and at all
times shall be, duly qualified as a foreign corporation in all states
in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full
power and authority to own its properties and to transact the
business in which it is presently engaged or presently proposes to
engage. Borrower maintains an office at 4880 Havana Street, Denver,
CO 80239. Unless Borrower has designated otherwise in writing,
the principal office is the office at which Borrower keeps its books
and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Borrower's
state of organization or any change in Borrower's name. Borrower shall
do all things necessary to preserve and to keep in full force and
effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all documents
or filings required by law relating to all assumed business names used
by Borrower. Excluding the name of Borrower, the following is a
complete list of all assumed business names under which Borrower
does business: None.
Authorization. Borrower's execution, delivery, and performance of
this Agreement and all the Related Documents have been duly authorized
by all necessary action by Borrower and do not conflict with, result
in a violation of, or constitute a default under (1) any provision of
(a) Borrower's articles of incorporation or organization, or bylaws,
or (b) any agreement or other instrument binding upon Borrower or
(2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial statements
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 Borrower is required to give under this Agreement when
delivered will constitute legal, valid, and binding obligations
of Borrower enforceable against Borrower in accordance with their
respective terms.
Properties. Except as contemplated by this Agreement or as
previously disclosed in Borrower's financial statements or in
writing to Lender and as accepted by Lender, and except for
property tax liens for taxes not presently due and payable,
Borrower owns and has good title to all of Borrower's properties
free and clear of all Security Interests, and has not executed
any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used or filed a financing statement
under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by
Lender in writing, Borrower represents and warrants that:
(1) During the period of Borrower's ownership of Borrower's
Collateral, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of
any Hazardous Substance by any person on, under, about or from
any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation
of any Environmental Laws; (b) any use, generation, manufacture,
storage, treatment, disposal, release or threatened release of
any Hazardous Substance on, under, about or from the Collateral
by any prior owners or occupants of any of the Collateral; or
(c) any actual or threatened litigation or claims of any kind by
any person relating to such matters. (3) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat, dispose
of or release any Hazardous Substance on, under, about or from any
of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorizes Lender and its agents to
enter upon the Collateral to make such inspections and tests as
Lender may deem appropriate to determine compliance of the
Collateral 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
Collateral for hazardous waste and Hazardous Substances. Borrower
hereby (1) 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 (2) 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 of a hazardous waste or substance on the
Collateral. The provisions of this section of the Agreement,
including the obligation to indemnify, shall survive the payment
of the Indebtedness and the termination, expiration or satisfaction
of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for
unpaid taxes) against Borrower is pending or threatened, and no
other event has occurred which may materially adversely affect
Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax
returns and reports that are or were required to be filed, have
been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those presently being or to
be contested by Borrower in good faith in the ordinary course of
business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or
indirectly securing repayment of Borrower's Loan and Note, that
would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements
(if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and
assigns, and are legally enforceable in accordance with their
respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender
that, so long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in
writing of (1) all material adverse changes in Borrower's
financial condition, and (2) 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 GAAP, applied on a consistent basis, and permit Lender to
examine and audit Borrower's books and records at all reasonable
times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later
than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory
to Lender.
Interim Statements. As soon as available, but in no event later
than 45 days after the end of each month, Borrower's balance
sheet and profit and loss statement for the period ended, prepared
by Borrower.
All financial reports required to be provided under this Agreement
shall be prepared in accordance with GAAP, applied on a consistent
basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants
and ratios:
Working Capital Requirements. Borrower shall comply with the
following working capital ratio requirements:
Current Ratio. Maintain a Current Ratio in excess of 1.000 to
1.000. The term "Current Ratio" means Borrower's total Current
Assets divided by Borrower's total Current Liabilities. This
liquidity ratio should be maintained at all times and may be
evaluated at any time.
Tangible Net Worth Requirements. Other Net Worth requirements
are as follows: Long term debt/consolidated net worth (in
accordance with Generally Accepted Accounting Principles (GAAP)
of not more than 1:1.
Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph
shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by
Borrower, as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with
respect to Borrower's properties and operations, in form, amounts,
coverages and with insurance companies 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 Lender's 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: (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4) the properties insured; (5) the
then current property values on the basis of which insurance has
been obtained, and the manner of determining those values; and
(6) 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.
Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between
Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender
in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of
every kind and nature, imposed upon Borrower or its properties,
income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's properties, income, or
profits.
Performance. Perform and comply, in a timely manner, with all
terms, conditions, and provisions set forth in this Agreement,
in the Related Documents, and in all other instruments and
agreements between Borrower and Lender. Borrower shall notify
Lender immediately in writing of any default in connection
with any agreement.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the
present executive and management personnel; provide written
notice to Lender of any change in executive and management
personnel; conduct its business affairs in a reasonable and
prudent manner.
Environmental Studies. Promptly conduct and complete, at
Borrower's expense, all such investigations, studies, samplings
and testings as may be requested by Lender or any governmental
authority relative to any substance, or any waste or by-product
of any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation, order
or directive, at or affecting any property or any facility owned,
leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy
of the Collateral, including without limitation, the Americans
With Disabilities Act. Borrower may contest in good faith any
such law, ordinance, or regulation and withhold compliance during
any proceeding, including appropriate appeals, so long as
Borrower has notified Lender in writing prior to doing so and
so long as, in Lender's sole opinion, Lender's interests in the
Collateral are not jeopardized. Lender may require Borrower to
post adequate security or a surety bond, reasonably satisfactory
to Lender, to protect Lender's interest.
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 Certificates. Unless waived in writing by Lender,
provide Lender at least annually, with a certificate executed
by Borrower's chief financial officer. or other officer or person
acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as
of the date of the certificate and further 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 any and all Environmental Laws; not cause or
permit to exist, as a result of an intentional or unintentional
action or omission on Borrower's 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 otter 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,
assignments, 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.
LENDER'S EXPENDITURES. If any action or proceeding is commenced
that would materially affect Lender's interest in the Collateral
or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to
Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or
any Related Documents, Lender on Borrower's behalf may (but shall
not be obligated to) take any action that Lender deems
appropriate, including but not limited to discharging or paying
all taxes, liens, security interests, encumbrances and other
claims, at any time levied or placed on any Collateral and
paying all costs for insuring, maintaining and preserving any
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 Borrower. All such expenses will 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 (1) the term of any applicable insurance policy; or
(2) 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.
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. (1) 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, (2) sell transfer
mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower's
accounts, except to Lender.
Additional Financial Restrictions. Borrower shall advise Bank
immediately of any adverse change in the business, property or
operating conditions, including litigation or threat of litigation.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire
or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business,
or (3) pay any dividends on Borrower's stock (other than dividends
payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred
and is continuing or would result from the payment of dividends,
it 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 Borrower's stock, or
purchase or retire any of Borrower's outstanding shares or
alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance
money or assets to any other person, enterprise or entity,
(2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or
guarantor other than in the ordinary course of business.
Agreements. Borrower will not enter into any agreement containing
any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or
in connection herewith.
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 dies,
becomes incompetent or 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; or (E) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.
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.
DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Payment Default. Borrower fails to make any payment when due
under the Loan.
Other Defaults. Borrower 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 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 or any Grantor'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 Borrower or on Borrower'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.
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.
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.
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 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 Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall
occur, except where otherwise provided in this Agreement or the
Related Documents, all commitments and obligations of Lender
under this Agreement or the Related Documents or any other
agreement immediately will terminate (including any obligation
to make further Loan Advances or disbursements), and, at
Lender's option, all Indebtedness immediately will become due
and payable, all without notice of any kind to Borrower, except
that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall
be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents
or available at law, in equity, or otherwise. Except as may be
prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly
or concurrently, Election by Lender to pursue any remedy shall
not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation
of Borrower or of any Grantor shall not affect Lender's right
to declare a default and to exercise its rights and remedies.
MISCELLANBOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties
as to the matters set forth in this Agreement. No alteration of
or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand
all of Lender's reasonable costs and expenses, including Lender's
attorneys' fees and Lender's legal expenses, incurred in
connection with the enforcement of this Agreement. Lender may
hire or pay someone else to help enforce this Agreement, and
Borrower shall pay the reasonable 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
(including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment
collection services. Borrower 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.
Consent to Loan Participation. Borrower agrees and consents to
Lender's sale or transfer, whether now or later, of one or more
participation interests in the Loan 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 Borrower
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 Loan and will have all the
rights granted under the participation agreement or agreements
governing the sale of such participation interests. Borrower
further waives all rights of offset or counterclaim that it may
have now or later against Lender or against any purchaser of
such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's
obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower
further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against
Lender.
Governing Law. This Agreement will be governed by federal law
applicable to Lender and, to the extent not preempted by federal
law, the laws of the State of Colorado without regard to its
conflicts of law provisions. This Agreement has been accepted by
Lender in the State of Colorado.
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
Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any of Borrower's or any
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. 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, Borrower
agrees to keep Lender informed at all times of Borrower's
current address. Unless otherwise provided or required by law,
if there is more than one Borrower, any notice given by Lender
to any Borrower is deemed to be notice given to all Borrowers.
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.
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 in this Agreement shall
include all of Borrower's subsidiaries and affiliates.
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 of Borrower's
subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on
behalf of Borrower contained in this Agreement or any Related
Documents shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's
rights under this Agreement or any interest therein, without the
prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands
and agrees that in extending Loan Advances. Lender is relying on
all representations, warranties, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered
by Borrower to Lender under this Agreement or the Related
Documents. Borrower further agrees that regardless of any
investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and
delivery to Lender of the Related Documents, shall be continuing
in nature, shall be deemed made and redated by Borrower at the
time each Loan Advance is made, 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.
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. Accounting words and terms not
otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:
Advance. The word "Advance" means a disbursement of Loan funds
made, or to be made, to Borrower or on Borrower's behalf on a
line of credit or multiple advance basis under the terms and
conditions of this Agreement.
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 Scott's Liquid
Gold-Inc. and includes all co-signers and co-makers signing
the Note.
Borrower. The word "Borrower" means Scott's Liquid Gold-Inc.
and includes all co-signers and co-makers signing the Note and
all their successors and assigns.
Collateral. The word "Collateral" means 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, collateral mortgage,
deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral 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.
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.
GAAP. The word "GAAP" means generally accepted accounting
principles.
Grantor. The word "Grantor" means each and all of the persons
or entities granting a Security Interest in any Collateral for
the Loan, including without limitation all Borrowers granting
such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor
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, chemical or infectious characteristics, may cause or
pose a present or potential hazard to human health or the
environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The
words "Hazardous Substances" are used in their very broadest
sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed
under the Environmental Laws. The term "Hazardous Substances"
also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and
costs and expenses for which Borrower is responsible under this
Agreement or under any of the Related Documents.
Lender. The word "Lender" means Citywide Banks, its successors
and assigns.
Loan. The word "Loan" means any and all 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 the Note executed by Scott's Liquid
Gold-Inc. in the principal amount of $5,156,641.00 dated June 7,
2006, together with all renewals of, extensions of, modifications
of, refinancing of, consolidations of, and substitutions for the
note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and
security interests securing Indebtedness owed by Borrower to
Lender; (2) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith;
(3) 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;
(4) 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",
(5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in
writing; and (6) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary
amount with respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all
promissory notes, credit agreements, loan agreements,
environmental 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 Loan.
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, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel mortgage, collateral 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.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS, THIS
BUSINESS LOAN AGREEMENT IS DATED JUNE 7, 2006.
BORROWER:
SCOTT'S LIQUID GOLD-INC.
By: /s/ Mark E. Goldstein
------------------------------------
Mark E. Goldstein, CEO and President
of Scott's Liquid Gold-Inc.
LENDER:
CITYWIDE BANKS
By: /s/Theresa M. NeSmith
------------------------------------
Authorized Signer
DEED OF TRUST
MAXIMUM PRINCIPAL AMOUNT SECURED. The Lien of this Deed of Trust
shall not exceed at any one time $5,156,641.00 except as allowed under
applicable Colorado law.
THIS DEED OF TRUST is dated June 7, 2006, among Scotts Liquid
Gold-Inc., whose address is 4880 Havana Street, Denver, CO 80239
("Grantor"); Citywide Banks, whose address is P0 Box 128, Aurora, CO
80040-0128 (referred to below sometimes as "Lender" and sometimes as
"Beneficiary"); and the Public Trustee of the City and County of Denver,
Colorado (referred to below as "Trustee").
CONVEYANCE AND GRANT. For valuable consideration. Grantor hereby
irrevocably grants, transfers and assigns to Trustee for the benefit
of Lender as Beneficiary all of Grantor's right, title, and interest
in and to the following described real property, together with all
existing or subsequently erected or affixed buildings, improvements and
fixtures; all easements, rights of way, and appurtenances; all water,
water rights and ditch rights (including stock in utilities with ditch
or irrigation rights); and all other rights, royalties, and profits
relating to the real property, including without limitation all minerals,
oil, gas, geothermal and similar matters, (the "Real Property") located
in Denver County, State of Colorado:
See attached Exhibit "A"
The Real Property or its address is commonly known as 4880 Havana Street,
Denver, CO 80239.
Grantor presently assigns to Lender (also known as Beneficiary in this
Deed of Trust) all of Grantor's right, title, and interest in and to all
present and future leases of the Property and all Rents from the Property.
In addition, Grantor grants to Lender a Uniform Commercial Code security
interest in the Personal Property and Rents.
THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY
INTEREST IN THE RENTS AND PERSONALPROPERTY. IS GIVEN TO SECURE (A) PAYMENT
OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER
THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED OF
TRUST IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of
Trust, Grantor shall pay to Lender all amounts secured by this Deed of
Trust as they become due, and shall strictly and in a timely manner
perform all of Grantor's obligations under the Note, this Deed of Trust,
and the Related Documents.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor's
possession and use of the Property shall be governed by the following
provisions:
Possession and Use. Until the occurrence of an Event of Default, Grantor
may (1) remain in possession and control of the Property; (2) use,
operate or manage the Property; and (3) collect the Rents from
the Property.
Duty to Maintain. Grantor shall maintain the Property in tenantable
condition and promptly perform all repairs, replacements, and maintenance
necessary to preserve its value.
Compliance With Environmental Laws. Grantor represents and warrants to
Lender that: (1) During the period of Grantor's ownership of the Property,
there has been no use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any Hazardous Substance by
any person on, under, about or from the Property; (2) Grantor has no
knowledge of, or reason to believe that there has been, except as
previously disclosed to and acknowledged by Lender in writing, (a) any
breach or violation of any Environmental Laws, (b) any use, generation,
manufacture, storage, treatment, disposal, release or threatened release
of any Hazardous Substance on, under, about or from the Property by any
prior owners or occupants of the Property, or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters;
and (3) Except as previously disclosed to and acknowledged by Lender in
writing, (a) neither Grantor nor any tenant, contractor, agent or other
authorized user of the Property shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about or
from the Property; and (b) any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations
and ordinances, including without limitation all Environmental Laws.
Grantor authorizes Lender and its agents to enter upon the Property to
make such inspections and tests, at Grantor's expense, as Lender may deem
appropriate to determine compliance of the Property with this section of
the Deed of Trust. Any inspections or tests made by Lender shall be for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Grantor or to any
other person. The representations and warranties contained herein are
based on Grantor's due diligence in investigating the Property 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 such laws; and
(2) 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 Deed of Trust or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
occurring prior to Grantor's ownership or interest in the Property,
whether or not the same was or should have been known to Grantor. The
provisions of this section of the Deed of Trust, including the obligation
to indemnify, shall survive the payment of the Indebtedness and the
satisfaction and reconveyance of the lien of this Deed of Trust and shall
not be affected by Lender's acquisition of any interest in the Property,
whether by foreclosure or otherwise.
Nuisance. Waste. Grantor shall not cause, conduct or permit any nuisance
nor commit, permit, or suffer any stripping of or waste on or to the
Property or any portion of the Property. Without limiting the generality
of the foregoing, Grantor will not remove, or grant to any other
party the right to remove, any timber, minerals (including oil and
gas), coal, clay, scoria, soil, gravel or rock products without Lender's
prior written consent.
Removal of Improvements. Grantor shall not demolish or remove any
Improvements from the Real Property without Lender's prior written
consent. As a condition to the removal of any Improvements, Lender may
require Grantor to make arrangements satisfactory to Lender to replace
such Improvements with Improvements of at least equal value.
Lender's Right to Enter. Lender and Lender's agents and representatives
may enter upon the Real Property at all reasonable times to attend to
Lender's interests and to inspect the Real Property for purposes of
Grantor's compliance with the terms and conditions of this Deed of Trust.
Compliance with Governmental Requirements. Grantor shall promptly comply
with all laws, ordinances, and regulations, now or hereafter in effect,
of all governmental authorities applicable to the use or occupancy of the
Property, including without limitation, the Americans With Disabilities
Act. Grantor may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Grantor has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Property are not jeopardized. Lender may require Grantor
to post adequate security or a surety bond, reasonably satisfactory to
Lender, to protect Lender's interest.
Duty to Protect. Grantor agrees neither to abandon or leave unattended
the Property. Grantor shall do all other acts, in addition to those acts
set forth above in this section, which from the character and use of the
Property are reasonably necessary to protect and preserve the Property.
TAXES AND LIENS. The following provisions relating to the taxes and liens
on the Property are part of this Deed of Trust:
Payment. Grantor shall pay when due land in all events prior to
delinquency) all taxes, special taxes, assessments, charges (including
water and sewer), fines and impositions levied against or on account of
the Property, and shall pay when due all claims for work done on or for
services rendered or material furnished to the Property. Grantor shall
maintain the Property free of all liens having priority over or equal to
the interest of Lender under this Deed of Trust, except for the lien of
taxes and assessments not due and except as otherwise provided in this
Deed of Trust.
Right to Contest. Grantor may withhold payment of any tax, assessment,
or claim in connection with a good faith dispute over the obligation to
pay, so long as Lender's interest in the Property is not jeopardized.
If a lien arises or is filed as a result of nonpayment, Grantor shall
within fifteen (15) days after the lien arises or, if a lien is filed,
within fifteen (15) days after Grantor has notice of the filing, secure
the discharge of the lien, or if requested by Lender, deposit with
Lender cash or a sufficient corporate surety bond or other security
DEED OF TRUST Page 4
satisfactory to Lender in an amount sufficient to discharge the lien
plus any costs and attorneys' fees, or other charges that could accrue
as a result of a foreclosure or sale under the lien, In any contest,
Grantor shall defend itself and Lender and shall satisfy any adverse
judgment before enforcement against the Property. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the
contest proceedings.
Evidence of Payment. Grantor shall upon demand furnish to Lender
satisfactory evidence of payment of the taxes or assessments and shall
authorize the appropriate governmental official to deliver to Lender at
any time a written statement of the taxes and assessments against the
Property.
Notice of Construction. Grantor shall notify Lender at least fifteen
(15) days before any work is commenced, any services are furnished, or
any materials are supplied to the Property, if any mechanic's lien,
materialmen's lien, or other lien could be asserted on account of the
work, services, or materials. Grantor will upon request of Lender
furnish to Lender advance assurances satisfactory to Lender that Grantor
can and will pay the cost of such improvements.
PROPERTY DAMAGE INSURANCE. The following provisions relating to
insuring the Property are a part of this Deed of Trust.
Maintenance of Insurance. Grantor shall procure and maintain policies
of fire insurance with standard extended coverage endorsements on a
replacement basis for the full insurable value covering all Improvements
on the Real Property in an amount sufficient to avoid application of
any coinsurance clause, and with a standard mortgagee clause in favor
of Lender. Grantor shall also procure and maintain comprehensive general
liability insurance in such coverage amounts as Lender may request with
Trustee and Lender being named as additional insureds in such liability
insurance policies. Additionally, Grantor shall maintain such other
insurance, including but not limited to hazard, business interruption,
and boiler insurance, as Lender may reasonably require. Policies shall
be written 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. 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. Should the Real Property be located in an area designated
by the Director of the Federal Emergency Management Agency as a special
flood hazard area, Grantor agrees to obtain and maintain Federal Flood
Insurance, if available, for the full unpaid principal balance of the
loan and any prior liens on the property securing the loan, up to the
maximum policy limits set under the National Flood Insurance Program,
or as otherwise required by Lender, and to maintain such insurance for
the term of the loan.
Application of Proceeds. Grantor shall promptly notify Lender of any
loss or damage to the Property. Lender may make proof of loss if Grantor
fails to do so within fifteen (15) days of the casualty. Whether or not
Lender's security is impaired, Lender may, at Lender's election, receive
and retain the proceeds of any insurance and apply the proceeds to the
reduction of the Indebtedness, payment of any lien affecting the
Property, or the restoration and repair of the Property. If Lender elects
to apply the proceeds to restoration and repair, Grantor shall repair or
replace the damaged or destroyed Improvements in a manner satisfactory to
Lender. Lender shall, upon satisfactory proof of such expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration if Grantor is not in default under this Deed of Trust. Any
proceeds which have not been disbursed within 180 days after their
receipt and which Lender has not committed to the repair or restoration
of the Property shall be used first to pay any amount owing to Lender
under this Deed of Trust, then to pay accrued interest, and the
remainder, if any, shall be applied to the principal balance of the
Indebtedness. If Lender holds any proceeds after payment in full of the
Indebtedness, such proceeds shall be paid to Grantor as Grantor's
interests may appear.
Grantor's Report on Insurance. Upon request of Lender, however not more
than once a year, Grantor shall furnish to Lender a report on each
existing policy of insurance showing: (11 the name of the insurer;
(2) the risks insured; (3) the amount of the policy; (41 the property
insured, the then current replacement value of such property, and the
manner of determining that value; and (5) the expiration date of the
policy. Grantor shall, upon request of Lender, have an independent
appraiser satisfactory to Lender determine the cash value replacement
cost of the Property.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that
would materially affect Lender's interest in the Property or if Grantor
fails to comply with any provision of this Dead of Trust or any Related
Documents, including but not limited to Grantor's failure to discharge
or pay when due any amounts Grantor is required to discharge or pay
under this Deed of Trust or any Related Documents, Lender on Grantor's
behalf may (but shall not be obligated to) take any action that Lender
deems appropriate, including but not limited to discharging or paying
all taxes, liens, security interests, encumbrances and other claims,
at any time levied or placed on the Property and paying all costs for
insuring, maintaining and preserving the Property. 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 will 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 (1) the term of any applicable insurance policy; or (2) 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. The Deed of Trust
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 Default.
WARRANTY; DEFENSE OF TITLE. The following provisions relating to
ownership of the Property are a part of this Deed of Trust:
Title. Grantor warrants that: (a) Grantor holds good and marketable
title of record to the Property in fee simple, free arid clear of all
liens and encumbrances other than those set forth in the Real Property
description or in any title insurance policy, title report, or final
title opinion issued in favor of, and accepted by, Lender in connection
with this Deed of Trust, and (b) Grantor has the full right, power, and
authority to execute and deliver this Deed of Trust to Lender.
Defense of Title. Subject to the exception in the paragraph above,
Grantor warrants and will forever defend the title to the Property
against the lawful claims of all persons. In the event any action or
proceeding is commenced that questions Grantor's title or the interest
of Trustee or Lender under this Deed of Trust, Grantor shall defend the
action at Grantor's expense. Grantor may be the nominal party in such
proceeding, but Lender shall be entitled to participate in the proceeding
and to be represented in the proceeding by counsel of Lender's own
choice, and Grantor will deliver, or cause to be delivered, to Lender
such instruments as Lender may request from time to time to permit such
participation.
Compliance With Laws. Grantor warrants that the Property and Grantor's
use of the Property complies with all existing applicable laws,
ordinances, and regulations of governmental authorities.
Survival of Representations and Warranties. All representations,
warranties, and agreements made by Grantor in this Deed of Trust shall
survive the execution and delivery of this Deed of Trust, 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.
CONDEMNATION. The following provisions relating to condemnation
proceedings are a part of this Deed of Trust:
Proceedings. If any proceeding in condemnation is filed, Grantor shall
promptly notify Lender in writing, and Grantor shell promptly take such
steps as may be necessary to defend the action and obtain the award.
Grantor may be the nominal party in such proceeding, but Lender shall
be entitled to participate in the proceeding and to be represented in
the proceeding by counsel of its own choice, and Grantor will deliver
or cause to be delivered to Lender such instruments and documentation
as may be requested by Lender from time to time to permit such
participation.
Application of Net Proceeds. If all or any part of the Property is
condemned by eminent domain proceedings or by any proceeding or purchase
in lieu of condemnation, Lender may at its election require that all or
any portion of the net proceeds of the award be applied to the
Indebtedness or the repair or restoration of the Property. The net
proceeds of the award shall mean the award after payment of all reasonable
costs, expenses, and attorneys' fees incurred by Trustee or Lender in
connection with the condemnation.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The
following provisions relating to governmental taxes, fees and charges
are a part of this Deed of Trust:
Current Taxes, Fees and Charges. Upon request by Lender, Grantor shall
execute such documents in addition to this Deed of Trust and take
whatever other action is requested by Lender to perfect and continue
Lender's lien on the Real Property. Grantor shall reimburse Lender for
all taxes, as described below, together with all expenses incurred in
recording, perfecting or continuing this Deed of Trust, including without
limitation all taxes, fees, documentary stamps, and other charges for
recording or registering this Deed of Trust.
Taxes. The following shall constitute taxes to which this section
applies: (1) a specific tax upon this type of Deed of Trust or upon all
or any part of the Indebtedness secured by this Deed of Trust; (2) a
specific tax on Grantor which Grantor is authorized or required to deduct
from payments on the Indebtedness secured by this type of Deed of Trust;
(3) a tax on this type of Deed of Trust chargeable against the Lender or
the holder of the Note; and (4) a specific tax on all or any portion of
the Indebtedness or on payments of principal and interest made by Grantor.
Subsequent Taxes. If any tax to which this section applies is enacted
subsequent to the date of this Deed of Trust, this event shall have the
same effect as an Event of Default, and Lender may exercise any or all
of its available remedies for an Event of Default as provided below
unless Grantor either (1) pays the tax before it becomes delinquent,
or (2) contests the tax as provided above in the Taxes and Liens section
and deposits with Lender cash or a sufficient corporate surety bond or
other security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions
relating to this Deed of Trust as a security agreement are a part of
this Deed of Trust:
Security Agreement. This instrument shall constitute a Security
Agreement to the extent any of the Property constitutes fixtures,
and Lender shall have all of the rights of a secured party under
the Uniform Commercial Code as amended from time to time.
Security Interest. Upon request by Lender, Grantor shall take whatever
action is requested by Lender to perfect and continue Lender's security
interest in the Rents and Personal Property. In addition to recording
this Deed of Trust in the real property records, Lender may, at any
time and without further authorization from Grantor, file executed
counterparts, copies or reproductions of this Deed of Trust as a financing
statement. Grantor shall reimburse Lender for all expenses incurred in
perfecting or continuing this security interest. Upon default, Grantor
shall not remove, sever or detach the Personal Property from the
Property. Upon default, Grantor shall assemble any Personal Property
not affixed to the Property in a manner and at a place reasonably
convenient to Grantor and Lender and make it available to Lender within
three (31 days after receipt of written demand from Lender to the extent
permitted by applicable law.
Addresses. The mailing addresses of Grantor (debtor) and Lender
(secured party) from which information concerning the security
interest granted by this Deed of Trust may be obtained (each as
required by the Uniform Commercial Code) are as stated on the first
page of this Deed of Trust.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions
relating to further assurances and attorney-in-fact are a part of
this Deed of Trust:
Further Assurances. At any time, and from time to time, upon request
of Lender, Grantor will make, execute and deliver, or will cause to be
made, executed or delivered, to Lender or to Lender's designee, and when
requested by Lender, cause to be filed, recorded, refiled, or rerecorded,
as the case may be, at such times and in such offices and places as Lender
may deem appropriate, any and all such mortgages, deeds of trust, security
deeds, security agreements, financing statements, continuation statements,
instruments of further assurance, certificates, and other documents as may,
in the sole opinion of Lender, be necessary or desirable in order to
effectuate. complete, perfect, continue, or preserve (1) Grantor's
obligations under the Note, this Deed of Trust, and the Related Documents,
and (2) the liens and security interests created by this Deed of Trust as
first and prior liens on the Property, whether now owned or hereafter
acquired by Grantor. Unless prohibited by law or Lender agrees to the
contrary in writing, Grantor shall reimburse Lender for all costs and
expenses incurred in connection with the matters referred to in this
paragraph.
Attorney-in-Fact. If Grantor fails to do any of the things referred to
in the preceding paragraph, Lender may do so for and in the name of
Grantor and at Grantor's expense. For such purposes, Grantor hereby
irrevocably appoints Lender as Grantor's attorney-in-fact for the purpose
of making, executing, delivering, filing, recording, and doing all other
things as may be necessary or desirable, in Lender's sole opinion, to
accomplish the matters referred to in the preceding paragraph.
FULL PERFORMANCE. Upon the full performance of all the obligations under
the Note and this Deed of Trust, Trustee may, upon production of documents
and fees as required under applicable law, release this Deed of Trust,
and such release shall constitute a release of the lien for all such
additional sums and expenditures made pursuant to this Deed of Trust.
Lender agrees to cooperate with Grantor in obtaining such release and
releasing the other collateral securing the Indebtedness. Any release
fees required by law shall be paid by Grantor, if permitted by applicable
law.
EVENTS OF DEFAULT. Each of the following, at Lenders option, shall
constitute an Event of Default under this Deed of Trust:
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 Deed of Trust
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.
Compliance Default. Failure to comply with any other term, obligation,
covenant or condition contained in this Deed of Trust, the Note or in any
of the Related Documents.
Default on Other Payments. Failure of Grantor within the time required by
this Deed of Trust to make any payment for taxes or insurance, or any
other payment necessary to prevent filing of or to effect discharge of
any lien.
Default in Favor of Third Parties. Should 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 ability to repay
the Indebtedness or perform their respective obligations under this Deed
of Trust 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 Deed of
Trust 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 Deed of Trust 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 property 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.
Breach of Other Agreement. Any breach by Grantor under the terms of any
other agreement between Grantor and Lender that is not remedied within
any grace period provided therein, including without limitation any
agreement concerning any indebtedness or other obligation of Grantor
to Lender, whether existing now or later.
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.
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.
Insecurity. Lender in good faith believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Deed of Trust, at any time thereafter, Trustee or Lender may exercise any
one or more of the following rights and remedies:
Election of Remedies. 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 Deed of
Trust, after Grantor's failure to perform, shall not affect Lender's
right to declare a default and exercise its remedies.
Accelerate Indebtedness. Lender shall have the right at its option
without notice to Grantor to declare the entire Indebtedness immediately
due and payable, including any prepayment penalty which Grantor would be
required to pay.
Foreclosure. Lender shall have the right to cause all or any part of the
Real Property, and Personal Property, if Lender decides to proceed
against it as if it were real property, to be sold by the Trustee
according to the laws of the State of Colorado as respects foreclosures
against real property. The Trustee shall give notice in accordance with
the laws of Colorado. The Trustee shall apply the proceeds of the sale
in the following order: (a) to all costs and expenses of the sale,
including but not limited to Trustee's fees, attorneys' fees, and the
cost of title evidence; (b) to all sums secured by this Deed of Trust;
and (c) the excess, if any, to the person or persons legally entitled
to the excess.
UCC Remedies. With respect to all or any part of the Personal Property,
Lender shall have all the rights and remedies of a secured party under
the Uniform Commercial Code.
Collect Rents. Lender shall have the right, without notice to Grantor
to take possession of and manage the Property and collect the Rents,
including amounts past due and unpaid, and apply the net proceeds, over
and above Lender's costs, against the Indebtedness. In furtherance of
this right, Lender may require any tenant or other user of the Property
to make payments of rent or use fees directly to Lender. If the Rents are
collected by Lender, then Grantor irrevocably designates Lender as
Grantor's attorney-in-fact to endorse instruments received in payment
thereof in the name of Grantor and to negotiate the same and collect the
proceeds. Payments by tenants or other users to Lender in response to
Lender's demand shall satisfy the obligations for which the payments
are made, whether or not any proper grounds for the demand existed.
Lender may exercise its rights under this subparagraph either in
person, by agent, or through a receiver.
Appoint Receiver. Lender shall have the right to have a receiver
appointed to take possession of all or any part of the Property, with
the power to protect and preserve the Property, to operate the Property
preceding foreclosure or sale, and to collect the Rents from the
Property 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 Property
exceeds the Indebtedness by a substantial amount. Employment by Lender
shall not disqualify a person from serving as a receiver. Receiver may
be appointed by a court of competent jurisdiction upon ex parte
application and without notice, notice being expressly waived,
Tenancy at Sufferance. If Grantor remains in possession of the Property
after the Property is sold as provided above or Lender otherwise becomes
entitled to possession of the Property upon default of Grantor, Grantor
shall become a tenant at sufferance of Lender or the purchaser of the
Property and shall, at Lender's option, either Ii) pay a reasonable
rental for the use of the Property, or (2) vacate the Property
immediately upon the demand of Lender.
Other Remedies. Trustee or Lender shall have any other right or remedy
provided in this Deed of Trust or the Note or by law.
Sale of the Property. In exercising its rights and remedies, Lender shall
be free to designate on or before it files a notice of election and
demand with the Trustee, that the Trustee sell all or any part of the
Property together or separately, in one sale or by separate sales,
Lender shall be entitled to bid at any public sale on all or any portion
of the Property. Upon any sale of the Property, whether made under a
power of sale granted in this Deed of Trust or pursuant to judicial
proceedings, if the holder of the Note is a purchaser at such sale, it
shall be entitled to use and apply all, or any portion of, the
Indebtedness for or in settlement or payment of all, or any portion of,
the purchase price of the Property purchased, and, in such case, this
Deed of Trust, the Note, and any documents evidencing expenditures
secured by this Deed of Trust shall be presented to the person conducting
the sale in order that the amount of Indebtedness so used or applied may
be credited thereon as having been paid.
Attorneys Fees; Expenses. If Lender forecloses or institutes any suitor
action to enforce any of the terms of this Deed of Trust, Lender shall be
entitled to recover such sum as the court may adjudge reasonable as
attorneys' fees at trial and upon any appeal. Whether or not any court
action is involved, and to the extent not prohibited by law, all
reasonable expenses Lender incurs that in Lenders opinion are necessary
at any time for the protection of its interest or the enforcement of its
rights shall become a part of the Indebtedness payable on demand and
shall bear interest at the Note rate from the date of the expenditure
until repaid. Expenses covered by this paragraph include, without
limitation, however subject to any limits under applicable law, Lenders
attorneys' fees whether or not there is a lawsuit, including attorneys'
fees and expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services, the cost of searching records,
obtaining title reports (including foreclosure reports), surveyors'
reports, and appraisal fees, title insurance, and fees for the Trustee,
to the extent permitted by applicable law. Grantor also will pay any
court costs, in addition to all other sums provided by law.
Rights of Trustee. To the extent permitted by applicable law, Trustee
shall have all of the rights and duties of Lender as set forth in this
section.
NOTICES. Any notice required to be given under this Deed of Trust,
including without limitation any notice of default and any notice of
sale 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 Deed of Trust. All
copies of notices of foreclosure from the holder of any lien which has
priority over this Deed of Trust shall be sent to Lender's address, as
shown near the beginning of this Deed of Trust. Any party may change
its address for notices under this Deed of Trust 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. Unless otherwise provided or required by law, if there is more
than one Grantor, any notice given by Lender to any Grantor is deemed
to be notice given to all Grantors.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Deed of Trust:
Amendments. This Deed of Trust, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Deed of Trust. No alteration of or
amendment to this Deed of Trust 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.
Annual Reports. If the Property is used for purposes other than
Grantor's residence, Grantor shall furnish to Lender, upon request, a
certified statement of net operating income received from the Property
during Grantor's previous fiscal year in such form and detail as Lender
shall require, "Net operating income" shall mean all cash receipts from
the Property less all cash expenditures made in connection with the
operation of the Property.
Caption Headings. Caption headings in this Deed of Trust are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Deed of Trust.
Merger. There shall be no merger of the interest or estate created
by this Deed of Trust with any other interest or estate in the Property
at any time held by or for the benefit of Lender in any capacity,
without the written consent of Lender.
Governing Law. This Deed of Trust will be governed by federal law
applicable to Lender and, to the extent not preempted by federal law,
the laws of the State of Colorado without regard to its conflicts of
law provisions. This Deed of Trust has been accepted by Lender in the
State of Colorado.
No Waive, by Lender. Lender shall not be deemed to have waived any
rights under this Deed of Trust 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 Deed of Trust
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 Deed of Trust. 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
Deed of Trust, 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.
Severability. If a court of competent jurisdiction finds any provision
of this Deed of Trust 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 Deed of Trust. Unless
otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Deed of Trust shall not
affect the legality, validity or enforceability of any other provision
of this Deed of Trust.
Successors and Assigns. Subject to any limitations stated in this Deed
of Trust on transfer of Grantor's interest, this Deed of Trust shall be
binding upon and inure to the benefit of the parties, their successors
and assigns. If ownership of the Property becomes vested in a person
other than Grantor, Lender, without notice to Grantor, may deal with
Grantor's successors with reference to this Deed of Trust and the
Indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Deed of Trust or liability under
the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of
this Deed of Trust.
Waiver of Homestead Exemption. Grantor hereby releases and waives all
rights and benefits of the homestead exemption laws of the State of
Colorado as to all Indebtedness secured by this Deed of Trust.
DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Deed of Trust. 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 Deed of Trust shall have the meanings
attributed to such terms in the Uniform Commercial Code:
Beneficiary. The word "Beneficiary" means Citywide Banks, and its
successors and assigns.
Borrower. The word "Borrower" means Scott's Liquid Gold-Inc. and includes
all co-signers and co-makers signing the Note and all their successors and
assigns.
Deed of Trust. The words "Deed of Trust" mean this Deed of Trust among
Grantor, Lender, and Trustee, and includes without limitation all
assignment and security interest provisions relating to the Personal
Property and Rents.
Default. The word "Default" means the Default set forth in this Deed of
Trust 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 USC. 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 Deed of Trust in the events of default
section of this Deed of Trust.
Grantor. The word "Grantor" means Scott's Liquid Gold-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, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words "Hazardous Substances" are used in their very
broadest sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes,
without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos.
Improvements. The word "Improvements" means all existing and future
improvements, buildings, structures, mobile homes affixed on the Real
Property, facilities, additions, replacements and other construction
on the Real Property.
Indebtedness. The word "Indebtedness" means all principal, interest,
and other amounts, costs and expenses payable under the Note or Related
Documents, together with all renewals of, extensions of, modifications
of, consolidations of and substitutions for the Note or Related
Documents and any amounts expended or advanced by Lender to discharge
Granter's obligations or expenses incurred by Trustee or Lender to
enforce Grantor's obligations under this Deed of Trust, together with
interest on such amounts as provided in this Deed of Trust.
Lender. The word "Lender" means Citywide Banks, its successors and
assigns.
Note. The word "Note" means the promissory note dated June 7, 2006,
in the original principal amount of $5,156,641.00 from Grantor to
Lender, together with all renewals of, extensions of, modifications
of, refinancings of, consolidations of, and substitutions for the
promissory note or agreement. NOTICE TO GRANTOR: THE NOTE CONTAINS A
VARIABLE INTEREST RATE.
Personal Property. The words "Personal Property" mean all equipment,
fixtures, and other articles of personal property now or hereafter
owned by Grantor, and now or hereafter attached or affixed to the
Real Property; together with all accessions, parts, and additions to,
all replacements of, and all substitutions for, any of such property;
and together with all proceeds (including without limitation all
insurance proceeds and refunds of premiums) from any sale or other
disposition of the Property.
Property. The word "Property" means collectively the Real Property
and the Personal Property.
Real Property. The words "Real Property" mean the real property,
interests and rights, as further described in this Deed of Trust,
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental 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,
Rents. The word "Rents" means all present and future rents, revenues,
income, issues, royalties, profits, and other benefits derived from the
Property,
Trustee. The word "Trustee" means the Public Trustee of Denver County.
Colorado, GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
DEED OF TRUST, AND GRANTOR AGREES TO ITS TERMS.
GRANTOR:
SCOTT'S LIQUID GOLD-INC.
By: /s/ Mark Goldstein
Mark E. Goldstein. CEO and President
of Scott's Liquid Gold-Inc.
CORPORATE ACKNOWLEDGMENT
STATE OF COLORADO )
) ss
COUNTY OF DENVER )
On this 7 day of June, 2006, before me, the undersigned Notary
Public, personally appeared Mark E. Goldstein, CEO and President
of Scott's Liquid Gold-Inc., and known to me to be an authorized
agent of the corporation that executed the Deed of Trust and
acknowledged the Deed of Trust to be the free and voluntary act
and deed of the corporation by authority of its Bylaws or by
resolution of its board of directors, for the uses and purposes
therein mentioned, and on oath stated that he or she is
authorized to execute this Deed of Trust and in fact executed
the Deed of Trust on behalf of the corporation.
By /s/Katheryn A. Stanek Residing at Citywide Banks
Notary Public in and for the State of Colorado
My commission expires 9-28-07
ASSIGNMENT OF RENTS
MAXIMUM PRINCIPAL AMOUNT SECURED. The Lien of this Assignment shall not
exceed at any one time $5,156,641.00 except as allowed under applicable
Colorado law.
THIS ASSIGNMENT OF RENTS dated June 7, 2006, is made and executed between
Scott's Liquid Gold-Inc., whose address is 4880 Havana Street, Denver,
CO 80239 (referred to below as "Grantor") and Citywide Banks, whose
address is P0 Box 128, Aurora, CO 80040-0128 (referred to below as
"Lender").
ASSIGNMENT. For valuable consideration, Grantor hereby assigns, grants a
continuing security interest in, and conveys to Lender all of Grantor's
right, title, and interest in and to the Rents from the following described
Property located in Denver County, State of Colorado:
See attached Exhibit "A"
The Property or its address is commonly known as 4880 Havana Street,
Denver, CO 80239.
THIS ASSIGNMENT IS GIVEN TO SECURE (1) PAYMENT OF THE INDEBTEDNESS AND
(2) PERFORMANCE OF ANY AND ALLOBLIGATIONS OF GRANTOR UNDER THE NOTE, THIS
ASSIGNMENT. AND THE RELATED DOCUMENTS. THIS ASSIGNMENT IS GIVEN AND
ACCEPTED ON THE FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Assignment
or any Related Documents, Grantor shall pay to Lender all amounts secured
by this Assignment as they become due, and shall strictly perform all of
Grantor's obligations under this Assignment. Unless and until Lender
exercises its right to collect the Rents as provided below and so long
as there is no default under this Assignment, Grantor may remain in
possession and control of and operate and manage the Property and collect
the Rents, provided that the granting of the right to collect the Rents
shall not constitute Lender's consent to the use of cash collateral in a
bankruptcy proceeding.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that:
Ownership. Grantor is entitled to receive the Rents free and clear of all
rights, loans, liens, encumbrances, and claims except as disclosed to and
accepted by Lender in writing.
Right to Assign. Grantor has the full right, power and authority to enter
into this Assignment and to assign and convey the Rents to Lender.
No Prior Assignment. Grantor has not previously assigned or conveyed the
Rents to any other person by any instrument now in force.
No Further Transfer. Grantor will not sell, assign, encumber, or otherwise
dispose of any of Grantor's rights in the Rents except as provided in this
Assignment.
LENDER'S RIGHT TO RECEIVE AND COLLECT RENTS. Lender shall have the right
at any time, and even though no default shall have occurred under this
Assignment, to collect and receive the Rents. For this purpose, Lender is
hereby given and granted the following rights, powers and authority
Notice to Tenants. Lender may send notices to any and all tenants of the
Property advising them of this Assignment and directing all Rents to be
paid directly to Lender or Lender's agent.
Enter the Property. Lender may enter upon and take possession of the
Property; demand, collect and receive from the tenants or from any other
persons liable therefor, all of the Rents; institute and carry on all
legal proceedings necessary for the protection of the Property, including
such proceedings as may be necessary to recover possession of the
Property; collect the Rents and remove any tenant or tenants or other
persons from the Property.
Maintain the Property. Lender may enter upon the Property to maintain
the Property and keep the same in repair; to pay the costs thereof and
of all services of all employees, including their equipment, and of all
continuing costs and expenses of maintaining the Property in proper repair
and condition, and also to pay all taxes, assessments and water utilities,
and the premiums on fire and other insurance effected by Lender on the
Property.
Compliance with Laws. Lender may do any and all things to execute and
comply with the laws of the State of Colorado and also all other laws,
rules, orders, ordinances and requirements of all other governmental
agencies affecting the Property.
Lease the Property. Lender may rent or lease the whole or any part of the
Property for such term or terms and on such conditions as Lender may deem
appropriate.
Employ Agents. Lender may engage such agent or agents as Lender may deem
appropriate, either in Lender's name or in Grantor's name, to rent and
manage the Property, including the collection and application of Rents.
Other Acts. Lender may do all such other things and acts with respect to
the Property as Lender may deem appropriate and may act exclusively and
solely in the place and stead of Grantor and to have all of the powers of
Grantor for the purposes stated above.
No Requirement to Act. Lender shall not be required to do any of the
foregoing acts or things, and the fact that Lender shall have performed
one or more of the foregoing acts or things shall not require Lender to
do any other specific act or thing.
APPLICATION OF RENTS. All costs and expenses incurred by Lender in
connection with the Property shall be for Grantor's account and Lender
may pay such costs and expenses from the Rents. Lender, in its sole
discretion, shall determine the application of any and all Rents received
by it; however, any such Rents received by Lender which are not applied to
such costs and expenses shall be applied to the Indebtedness. All
expenditures made by Lender under this Assignment and not
reimbursed from the Rents shall become a part of the Indebtedness
secured by this Assignment, and shall be payable on demand, with
interest at the Note rate from date of expenditure until paid.
FULL PERFORMANCE. If Grantor pays all of the Indebtedness when due and
otherwise performs all the obligations imposed upon Grantor under this
Assignment, the Note, and the Related Documents, Lender shall execute and
deliver to Grantor a suitable satisfaction of this Assignment and suitable
statements of termination of any financing statement on file evidencing
Lenders security interest in the Rents and the Property. Any termination
fee required by law shall be paid by Grantor, if permitted by applicable
law.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Property or if Grantor fails to
comply with any provision of this Assignment or any Related Documents,
including but not limited to Grantor's failure to discharge or pay when
due any amounts Grantor is required to discharge or pay under this
Assignment or any Related Documents, Lender on Grantor's behalf may (but
shall not be obligated to) take any action that Lender deems appropriate,
including but not limited to discharging or paying all taxes, liens,
security interests, encumbrances and other claims, at any time levied or
placed on the Rents or the Property and paying all costs for insuring,
maintaining and preserving the Property. 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 will 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
(1) the term of any applicable insurance policy; or (2) the remaining
term of the Note; or (3) be treated as a balloon payment which will be
due and payable at the Note's maturity. The Assignment 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 Default.
DEFAULT. Each of the following, at Lender's option, shall constitute an
Event of Default under this Assignment:
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 Assignment 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 on Other Payments. Failure of Grantor within the time required
by this Assignment to make any payment for taxes or insurance, or any
other payment necessary to prevent filing of or to effect discharge of
any lien.
Default in Favor of Third Parties. 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 Grantor's property or Grantor's ability to
perform Grantor's obligations under this Assignment 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
Assignment 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 Assignment 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 the Rents or any property 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.
Property Damage or Loss. The Property is lost, stolen, substantially
damaged, sold, or borrowed against.
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.
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.
Insecurity. Lender in good faith believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of
Default and at any time thereafter, Lender may exercise any one or
more of the following rights and remedies, in addition to any other
rights or remedies provided by law:
Accelerate Indebtedness. Lender shall have the right at its option
without notice to Grantor to declare the entire Indebtedness immediately
due and payable, including any prepayment penalty which Grantor would be
required to pay.
Collect Rents. Lender shall have the right, without notice to Grantor,
to take possession of the Property and collect the Rents,
including amounts past due and unpaid, and apply the net
proceeds, over and above Lender's costs, against the
Indebtedness. In furtherance of this right, Lender shall have
all the rights provided for in the Lender's Right to Receive
and Collect Rents Section, above. If the Rents are collected by
Lender, then Grantor irrevocably designates Lender as Grantor's
attorney-in-fact to endorse instruments received in payment
thereof in the name of Grantor and to negotiate the same and
collect the proceeds. Payments by tenants or other users to
Lender in response to Lender's demand shall satisfy the
obligations for which the payments are made, whether or not any
proper grounds for the demand existed. Lender may exercise its
rights under this subparagraph either in person, by agent, or
through a receiver.
Appoint Receiver. Lender shall have the right to have a receiver
appointed to take possession of all or any part of the Property, with
the power to protect and preserve the Property, to operate the Property
preceding foreclosure or sale, and to collect the Rents from the
Property 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 Property exceeds the
Indebtedness by a substantial amount. Employment by Lender shall not
disqualify a person from serving as a receiver. Receiver may be appointed
by a court of competent jurisdiction upon ex parte application and without
notice, notice being expressly waived.
Other Remedies. Lender shall have all other rights and remedies provided
in this Assignment or the Note or by law.
Election of Remedies. 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 Assignment,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and exercise its remedies.
Attorneys' Fees; Expenses. If Lender forecloses or institutes any suit or
action to enforce any of the terms of this Assignment, Lender shall be
entitled to recover such sum as the court may adjudge reasonable as
attorneys' fees at trial and upon any appeal. Whether or not any court
action is involved, and to the extent not prohibited by law, all
reasonable expenses Lender incurs that in Lender's opinion are necessary
at any time for the protection of its interest or the enforcement of its
rights shall become a part of the Indebtedness payable on demand and
shall bear interest at the Note rate from the date of the expenditure
until repaid. Expenses covered by this paragraph include, without
limitation, however subject to any limits under applicable law, Lender's
attorneys' fees whether or not there is a lawsuit, including attorneys'
fees and expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services, the cost of searching records,
obtaining title reports (including foreclosure reports), surveyors'
reports, and appraisal fees, title insurance, and tees for the Trustee,
to the extent permitted by applicable law, Grantor also will pay any
court costs, in addition to all other sums provided by law.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Assignment:
Amendments. This Assignment, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Assignment. No alteration of or
amendment to this Assignment 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.
Caption Headings. Caption headings in this Assignment are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Assignment.
Governing Law. This Assignment will be governed by federal law applicable
to Lender and, to the extent not preempted by federal law, the laws of the
State of Colorado without regard to its conflicts of law provisions. This
Assignment has been accepted by Lender in the State of Colorado.
Merger. There shall be no merger of the interest or estate created by this
assignment with any other interest or estate in the Property at any time
held by or for the benefit of Lender in any capacity, without the written
consent of Lender.
Interpretation. (1) In all cases where there is more than one Borrower or
Grantor, then all words used in this Assignment in the singular shall be
deemed to have been used in the plural where the context and construction
so require. (2) If more than one person signs this Assignment as
"Grantor," the obligations of each Grantor are joint and several. This
means that if Lender brings a lawsuit, Lender may sue any one or more of
the Grantors. If Borrower and Grantor are not the same person, Lender
need not sue Borrower first, and that Borrower need not be joined in any
lawsuit. (3) The names given to paragraphs or sections in this Assignment
are for convenience purposes only. They are not to be used to interpret or
define the provisions of this Assignment.
No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Assignment 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 Assignment 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 Assignment. 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 Assignment, 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. Any notice required to be given under this Assignment 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 Assignment, Any party may change its
address for notices under this Assignment 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.
Unless otherwise provided or required by law, if there is more than
one Grantor, any notice given by Lender to any Grantor is deemed to be
notice given to all Grantors.
Powers of Attorney. The various agencies and powers of attorney conveyed
on Lender under this Assignment are granted for purposes of security and
may not be revoked by Grantor until such time as the same are renounced
by Lender.
Severability. If a court of competent jurisdiction finds any provision of
this Assignment 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 Assignment. Unless
otherwise required by law, the illegality, invalidity, or unenforceability
of any provision of this Assignment shall not affect the legality,
validity or enforceability of any other provision of this Assignment.
Successors and Assigns. Subject to any limitations stated in this
Assignment on transfer of Grantor's interest, this Assignment shall be
binding upon and inure to the benefit of the parties, their successors
and assigns. If ownership of the Property becomes vested in a person
other than Grantor, Lender, without notice to Grantor, may deal with
Grantor's successors with reference to this Assignment and the
Indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Assignment or liability under the
Indebtedness.
Time is of the Essence. Time is of the essence in the performance of
this Assignment.
WAIVER OF HOMESTEAD EXEMPTION. Grantor hereby releases and waives all
rights and benefits of the homestead exemption laws of the State of
Colorado as to all Indebtedness secured by this Assignment.
WAIVER OF RIGHT OF REDEMPTION. NOTWITHSTANDING ANY OF THE PROVISIONS TO
THE CONTRARY CONTAINED IN THIS ASSIGNMENT, GRANTOR HEREBY WAIVES ANY
AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR JUDGMENT OF
FORECLOSURE ON GRANTOR'S BEHALF AND ON BEHALF OF EACH AND EVERY PERSON,
EXCEPT JUDGMENT CREDITORS OF GRANTOR, ACQUIRING ANY INTEREST IN OR
TITLE TO THE PROPERTY SUBSEQUENT TO THE DATE OF THIS ASSIGNMENT.
DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Assignment. 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 Assignment shall have the meanings attributed
to such terms in the Uniform Commercial Code:
Assignment. The word "Assignment" means this ASSIGNMENT OF RENTS, as this
ASSIGNMENT OF RENTS may be amended or modified from time to time, together
with all exhibits and schedules attached to this ASSIGNMENT OF RENTS from
time to time.
Borrower. The word "Borrower" means Scott's Liquid Gold-Inc..
Default. The word "Default" means the Default set forth in this Assignment
in the section titled "Default".
Event of Default. The words "Event of Default" mean any of the events of
default set forth in this Assignment in the default section of this
Assignment.
Grantor. The word "Grantor" means Scott's Liquid Gold-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.
Indebtedness. The word "Indebtedness" means all principal, interest, and
other amounts, costs and expenses payable under the Note or Related
Documents, together with all renewals of, extensions of, modifications
of, consolidations of and substitutions for the Note or Related Documents
and any amounts expended or advanced by Lender to discharge Grantor's
obligations or expenses incurred by Lender to enforce Grantor's
obligations under this Assignment, together with interest on such
amounts as provided in this Assignment.
Lender. The word "Lender" means Citywide Banks, its successors and
assigns.
Note. The word "Note" means the promissory note dated June 7, 2006, in
the original principal amount of $5,156,641.00 from Grantor to Lender,
together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the promissory
note or agreement.
Property. The word "Property" means all of Grantor's right, title and
interest in and to all the Property as described in the "Assignment"
section of this Assignment.
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental 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.
Rents. The word "Rents" means all of Grantor's present and future rights,
title and interest in, to and under any and all present and future leases,
including, without limitation, all rents, revenue, income, issues,
royalties, bonuses, accounts receivable, cash or security deposits,
advance rentals, profits and proceeds from the Property, and other
payments and benefits derived or to be derived from such leases of
every kind and nature, whether due now or later, including without
limitation Grantor's right to enforce such leases and to receive and
collect payment and proceeds thereunder.
THE UNDERSIGNED ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
ASSIGNMENT, AND NOT PERSONALLY BUT AS AN AUTHORIZED SIGNER, HAS CAUSED
THIS ASSIGNMENT TO BE SIGNED AND EXECUTED ON BEHALF OF GRANTOR ON
JUNE 7, 2006.
GRANTOR:
SCOTT'S LIQUID GOLD-INC.
By /s/ Mark Goldstein
Mark E. Goldstein, CEO and President
of Scott's Liquid Gold-Inc.
CORPORATE ACKNOWLEDGMENT
STATE OF COLORADO )
) ss
COUNTY OF DENVER )
On this 7 day of June, 2006, before me, the undersigned
Notary Public, personally appeared Mark E. Goldstein, CEO
and President of Scott's Liquid Gold-Inc., and known to me to be
an authorized agent of the corporation that executed the Deed of
Trust and acknowledged the Deed of Trust to be the free and
voluntary act and deed of the corporation by authority of its
Bylaws or by resolution of its board of directors, for the uses
and purposes therein mentioned, and on oath stated that he or
she is authorized to execute this Deed of Trust and in fact
executed the Deed of Trust on behalf of the corporation.
By /s/ Katheryn A. Stanek Residing at Citywide Banks
Notary Public in and for the State of Colorado
My commission expires 9-28-07
AGREEMENT TO REDUCE CREDIT LINE
BETWEEN CITYWIDE BANKS (LENDER)
AND SCOTT'S LIQUID GOLD-INC. (BORROWER)
The parties hereby agree as follows:
(1) Principal balance of line of credit #200070169 existing between
Lender and Borrower is being reduced this date by $500,000.00 from
proceeds of a new real estate loan being funded this date by Lender
to Borrower.
(2) In consideration of said principal reduction, Lender and
Borrower agree to reduce the credit limit on line of credit
#200070169 from a limit of $1,800,000.00 to a limit of $1,300,000.00.
The parties have executed this Agreement this 7th day of June 2006.
"Lender" "Borrower"
CITYWIDE BANKS SCOTT'S LIQUID GOLD-INC.
By: /s/ Theresa M. NeSmith By: /s/ Mark Goldstein
- -------------------------------- ---------------------------
Title: Branch President Title: Pres/CEO
ADDENDUM TO LOAN DOCUMENTS
DATED AS OF JUNE 7, 2006
BETWEEN CITYWIDE BANKS (LENDER)
AND SCOTT'S LIQUID GOLD-INC. (BORROWER)
The parties agree to the following additions and changes to each
of the loan documents described below, all of which are dated as of
June 7, 2006. To the extent of any conflict between the terms and
conditions of such loan documents and this Addendum, the terms and
conditions of this Addendum shall control and supersede the terms and
conditions of the loan documents.
Promissory Note By Borrower
1. In "Interest After Default", "21.000%" is deleted and replaced
with "5.000% plus the Index".
2. In "Default - Other Defaults", the following is added at the
end of this paragraph before the period: "and has not cured such
failure within 30 days after Borrower has received notice of such failure
from Lender."
3. In "Default - False Statements", the following is deleted:
"or becomes false or misleading at any time thereafter".
4. In "Default", the paragraph starting with "Change In Ownership"
is deleted in its entirety.
5. In "Lender's Rights" after the words "upon default" and before
the comma, the following is added: "and upon written notice by Lender,"
Business Loan Agreement Between Borrower and Lender
6. The lead-in sentence of "Representations and Warranties", is
hereby amended to read in its entirety as follows: "The Borrower
represents and warrants to Lender, as of the date of this Agreement, as
of the date of each disbursement of loan proceeds and as of the date of
any renewal, extension or modification of any loan:"
7. In "Representations and Warranties - Properties", in the first
sentence, after "Except as contemplated by this Agreement", the following
is added: "including without limitation 'Permitted Liens'".
8. The following is disclosed by Borrower to Lender and
acknowledged by Lender in writing in respect of "Representations and
Warranties - Hazardous Substances": (A) As part of its manufacturing
operations, Borrower uses, generates, stores and disposes of Hazardous
Substances. (B) A tenant engaged in manufacturing at Borrower's
facilities may do the same. (C) As previously reported in public
filings, in the 1990s Borrower was a defendant in an environmental
lawsuit brought by the United States Justice Department at the request
of the United States Army, alleging contribution by Borrower to
contamination in a groundwater aquifer underlying a portion of the Rocky
Mountain Arsenal. In the fourth quarter of 1996, Borrower and the United
States, on behalf of the Department of the Army, negotiated a settlement
of this dispute, which included Borrower not admitting any wrongdoing.
9. Under "Affirmative Covenants - Other Agreements", in the second
line after the words "any other party" the following is added: "which
materially affects Borrower's financial condition".
10. In "Affirmative Covenants - Taxes, Charges and Liens", the
following is added at the end of this paragraph prior to the period:
"unless contested in good faith by Borrower".
11. In "Affirmative Covenants - Compliance with Governmental
Requirements", after the first word "Comply", the following is added:
"in all material respects".
12. In "Affirmative Covenants - Environmental Compliance and
Reports", the following sentence is added at the end of such paragraph:
"The foregoing shall not prohibit any use, generation, storage or other
activity relating to any Hazardous Substance so long as such activity
has been disclosed to and acknowledged by Lender in writing as provided
in Representations and Warranties above and is in compliance with other
covenants".
13. In "Negative Covenants - Indebtedness and Liens", the following
is deleted from this paragraph in its entirety: all of clause
(1) beginning with "(1) Except" and ending with "capital lease".
14. In "Negative Covenants - Continuity of Operations", the
following is hereby deleted: The word "or" preceding clause (3) and
all of clause (3) to the end of this paragraph.
15. In "Negative Covenants - Agreements", the following is added
at the end of such paragraph before the period: "unless any performance
of such agreement that would violate this Agreement is subject to the
prior written consent of the Lender".
16. In "Default - Other Defaults", the following is added at the
end of such paragraph before the period: "and has not cured such
failure within 30 days after Borrower has received notice of such
failure from Lender."
17. In "Default - False Statements", the following is deleted:
"or become false or misleading at any time thereafter".
18. In "Default", the paragraph starting with "Change in
Ownership" is deleted in its entirety.
19. In "Effect of an Event of Default", the first sentence is
hereby revised to read in its entirety as follows: "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 further
Loan Advances or disbursements), and, at Lender's option upon notice to
Borrower, all Indebtedness immediately will become due and payable,
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."
20. In "Miscellaneous Provisions - Consent to Loan Participation",
the following sentence is hereby added as the third sentence of this
paragraph: "Notwithstanding any other provision, any purchaser of a
participation interest must comply with the same confidentiality
obligations as apply to Lender".
21. In "Miscellaneous Provisions - Consent to Loan Participation",
the following is deleted: The last sentence of this paragraph beginning
"Borrower further agrees" and ending "against Lender".
22. In "Miscellaneous Provisions - Survival of Representations and
Warranties", the following is deleted: "shall be continuing in nature,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur."
23. In "Definitions - Permitted Liens", the following is added at
the end of clause (3) before the semi-colon: "or being contested in good
faith".
Deed of Trust Among Borrower, Lender and the Public Trustee of the City
and County of Denver, Colorado
24. In "Possession and Maintenance of the Property - Compliance
With Environmental Laws", Grantor makes the disclosure stated above in
Section 8 of this Addendum, and Lender acknowledges such disclosure.
25. In "Security Agreement; Financing Statements - Security
Interest", the following is deleted from this paragraph: The last
sentence beginning "Upon default" and ending with "applicable law".
26. In "Events of Default - Other Defaults", the following is
added at the end of such paragraph before the period: "and has not
cured such failure within 30 days after Grantor has received notice
of such failure from Lender."
27. In "Events of Default - Default in Other Payments", add the
following at the end of this paragraph before the period: "except as
permitted by this Deed of Trust".
28. In "Events of Default - False Statements", the following is
deleted: "or become false or misleading at any time thereafter".
29. In "Rights and Remedies on Default - Accelerate Indebtedness",
the words "without notice" are deleted and replaced with the following:
"upon notice".
30. In "Definitions - Personal Property", the following are deleted:
In the first line, the word "equipment"; and in the second line, the words
"attached or".
Assignment of Rents Between Borrower and Lender
31. In "Default - Other Defaults", the following is added at
the end of such paragraph before the period: "and has not cured such
failure within 30 days after Borrower has received notice of such failure
from Lender."
32. In "Default - Defaults or Other Payments", the following is
added at the end of this paragraph before the period: "except as
permitted by the Related Documents".
33. In "Default - False Statements", the following is deleted:
"or becomes false or misleading at any time thereafter".
34. In "Default", the paragraph starting with "Property Damage
or Loss" is deleted in its entirety.
35. In "Rights and Remedies on Default - Accelerate Indebtedness",
the words "without notice" are deleted and replaced with the following:
"upon notice".
Corporate Resolution to Borrow Grant/Grant Collateral
36. In the paragraph called "The Corporation's Existence", in the
second to last line, the following words are added after "shall comply":
"in all material respects".
Agreement to Provide Insurance
37. In "Collateral: Deductibles:" $500.00 is deleted and
replaced by "All coverage $10,000 except, flood and earth movement
$100,000, wind and hail $50,000, water damage $25,000."
The parties have executed the Addendum on the dates set forth
below.
"Lender" "Borrower"
CITYWIDE BANKS SCOTT'S LIQUID GOLD-INC.
By: /s/ Theresa M. NeSmith By: /s/ Mark E. Goldstein
Title: Branch President Title: President & C.E.O.
Date: June 7, 2006 Date: June 7, 2006