LOAN AGREEMENT
This Loan Agreement (the "Agreement") is made and entered into this
31st day of May, 2000, by and between Zions First National Bank, a national
banking association ("Lender") and Evans & Sutherland Computer Corporation, a
Utah corporation ("Borrower").
In exchange for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. When used in this Agreement, the following terms
shall have the following meanings:
1.1.1 "Appraisal" means the appraisal of the Property prepared
by an appraiser and showing a value for the Property acceptable to Lender.
1.1.2 "Assignment of Ground Lease" means the Assignment of
Tenant's Interest in Ground Lease for Security dated the Closing Date and
entered into in connection with the Loan.
1.1.3 "Assignment of Leases" means the Assignment of Leases
dated the Closing Date and entered into in connection with the Loan.
1.1.4 "Building 540 Ground Lease" means the Lease Agreement
dated November 21, 1972, as amended by an Addendum to Lease Agreement dated
November 21, 1972, a Second Addendum to Lease Agreement dated June 4, 1973, a
Third Addendum to Lease Agreement dated December 7, 1973, and a Fourth Addendum
to Lease Agreement dated September 12, 1979, all entered into between Ground
Lessor, as lessor, and Mountain Co-Venture, a general partnership, as lessee,
and as amended by a Fifth Addendum to Lease Agreement dated April 9, 1987
entered into between Ground Lessor, as lessor, and Borrower, as lessee, wherein
Ground Lessor leases a portion of the Property known as Building 540 to
Borrower.
1.1.5 "Building 560 Ground Lease" means the Lease Agreement
dated September 4, 1979 entered into between Ground Lessor, as lessor, and Tri
Venture, a general partnership, as lessee, as amended by a First Addendum to
Lease Agreement dated April 9, 1987, and a Second Addendum to Lease Agreement
dated December 31, 1990, all entered into between Ground Lessor, as lessor, and
Borrower, as lessee, wherein Ground Lessor leases a portion of the Property
known as Building 560 to Borrower.
1.1.6 "Building 580 Ground Lease" means the Lease Agreement
dated November 21, 1973, as amended by a First Addendum to Lease Agreement dated
May 24, 1974, a Second Addendum to Lease Agreement dated March 23, 1977, a Third
Addendum to Lease Agreement dated September 12, 1979, all entered into between
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Ground Lessor, as lessor, and Park Enterprises, a general partnership, as
lessee, and as amended by a Fourth Addendum to Lease Agreement dated April 9,
1987 entered into between Ground Lessor, as lessor, and Borrower, as lessee,
wherein Ground Lessor leases a portion of the Property known as Building 580 to
Borrower.
1.1.7 "Building 600 Ground Lease" means the Lease Agreement
dated April 9, 1987, as amended by a First Addendum to Lease Agreement dated
December 31, 1990, all entered into between Ground Lessor, as lessor, and
Borrower, as lessee, wherein Ground Lessor leases a portion of the Property
known as Building 600 to Borrower.
1.1.8 "Building 650 Ground Lease" means the Lease Agreement
dated September 5, 1980 entered into between Ground Lessor, as lessor, and Black
Hawk Investment Company, a general partnership, as lessee, and as amended by a
First Amendment to Lease Agreement dated June 7, 1982, a Second Amendment to
Lease Agreement dated September 28, 1982, a Third Addendum to Lease Agreement
dated April 9, 1987, and a Fourth Addendum to Lease Agreement dated December 31,
1990, all entered into between Ground Lessor, as lessor, and Borrower, as
lessee, wherein Ground Lessor leases a portion of the Property known as Building
650 to Borrower.
1.1.9 "Building 770 Ground Lease" means the Lease Agreement
dated April 1, 1988, as amended by a First Addendum to Lease Agreement dated
December 31, 1990, all entered into between Ground Lessor, as lessor, and
Borrower, as lessee, wherein Ground Lessor leases a portion of the Property
known as Building 770 to Borrower.
1.1.10 "Building 790 Ground Lease" means the Lease Agreement
dated December 31, 1990 entered into between Ground Lessor, as lessor, and
Borrower, as lessee, wherein Ground Lessor leases a portion of the Property
known as Building 790 to Borrower.
1.1.11 "Closing Date" means the date of this Agreement set
forth in the first paragraph on the first page of this Agreement.
1.1.12 "Collateral" means the property described in Section
2.4 of this Agreement as collateral for the Loan.
1.1.13 "Environmental Compliance Audit" means an audit of the
Project for the purpose of determining whether Borrower's use of the Project and
the Project are in substantial compliance with all applicable Environmental
Laws. The audit shall include, without limitation, (i) a determination of all
environmental registrations and notices required to be filed by Borrower with
respect to the Project, (ii) a determination of all permits and approvals
required to be obtained or maintained by Borrower with respect to the Project,
(iii) an examination of the Project to determine whether there has been any
disposal of Hazardous Materials on or under the Project or any other violation
of any applicable Environmental Law affecting Borrower's use of the Project or
the Project which requires remediation to be in compliance with Environmental
Laws in effect as of the date of the audit, and (iv) a review of Borrower's
facilities, records, policies, procedures and ongoing operations to determine
whether Borrower's operations are being conducted in full compliance with all
applicable Environmental Laws.
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1.1.14 "Environmental Compliance Audit Certificate" means a
certificate addressed to the Lender issued by a competent, independent
environmental consultant acceptable to the Lender certifying that the consultant
has completed an Environmental Compliance Audit of Borrower's use of the Project
and the Project, and that, except as otherwise disclosed in the Environmental
Report, (i) as of the effective date of the certificate, Borrower's use of the
Project and the Project are in substantial compliance with all applicable
Environmental Laws, (ii) there has been no known disposal of Hazardous Materials
at, in, on or under the Project which requires remediation to be in compliance
with Environmental Laws in effect as of the date of the audit, and (iii) in the
consultant's opinion after due inquiry, there is no basis for the consultant to
recommend or require further investigation or testing with respect to any
suspected or possible disposal of Hazardous Materials at the Project.
1.1.15 "Environmental Laws" means all federal, state and local
laws and ordinances pertaining to the generation, manufacture, refining,
recycling, treatment, handling, use, storage, transportation, disposal and
cleanup of hazardous, radioactive, reactive, flammable, infectious, toxic or
dangerous substances or materials or the protection of public health or of the
environment, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. ss.ss. 9601, et
seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss.ss.
6901, et seq.); the Toxic Substances Control Act (15 U.S.C. ss.ss. 2601, et
seq.); the Clean Air Act (42 U.S.C.ss.ss. 7401, et seq.); the Federal Water
Pollution Control Act (33 U.S.C. ss.ss. 1251, et seq.); the Safe Drinking Water
Act (42 U.S.C. ss.ss.300(f) et seq.); the Hazardous Material Transportation Act
(49 U.S.C. ss.ss. 1801, et seq.); the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. ss.ss. 136 et seq.); the Occupational Safety and
Health Act (29 U.S.C. ss.ss.651 et seq.); and any similar state law, including
all amendments thereto and all regulations promulgated thereunder, and further
including the conditions and requirements of all permits and regulatory
approvals issued thereunder.
1.1.16 "Environmental Report" means individually and
collectively (i) the environmental sensitivity questionnaire prepared by
Borrower and delivered to Lender in connection with the Property, and (ii) any
environmental reports acceptable to Lender prepared by an environmental engineer
acceptable to Lender and delivered to Lender in connection with the Property.
1.1.17 "Event of Default" has the meaning set forth in Article
6 of this Agreement.
1.1.18 "Ground Lease" means collectively the Building 540
Ground Lease, the Building 560 Ground Lease, the Building 580 Ground Lease, the
Building 600 Ground Lease, the Building 650 Ground Lease, the Building 770
Ground Lease, and the Building 790 Ground Lease.
1.1.19 "Ground Lease Estoppel Certificate" means the Ground
Lease Estoppel Certificate and Consent dated the Closing Date and executed by
Ground Lessor in connection with the Loan.
1.1.20 "Ground Lessor" means the University of Utah, a body
corporate and politic.
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1.1.21 "Hazardous Materials" means (a) "hazardous waste" as
defined by the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), including any future
amendments thereto, and regulations promulgated thereunder; (b) "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), including any future
amendments thereto, and regulations promulgated thereunder; (c) asbestos; (d)
polychlorinated biphenyls; (e) underground storage tanks, whether empty or
filled or partially filled with any substance; (f) any substance the presence of
which is or becomes prohibited by any federal, state, or local law, ordinance,
rule, or regulation; and (g) any hazardous or toxic substance, material, or
waste which under any federal, state, or local law, ordinance, rule, or
regulation requires special handling or notification in its collection, storage,
treatment or disposal, and any matter or material defined as a "Hazardous
Material", or other similar term, under the Ground Lease.
1.1.22 "Leases" has the meaning described in Section 4.10 of
this Agreement.
1.1.23 "Loan" means the loan described in Article 2 of this
Agreement made by Lender to Borrower pursuant to the Loan Documents, which Loan
is in the amount of the Principal Amount.
1.1.24 "Loan Documents" means this Agreement, the Note, Trust
Deed, Assignment of Leases, and any other documents, whether now or hereafter
existing, executed in connection with the Loan.
1.1.25 "Loan Fee" means the loan fees described in Section 2.3
of this Agreement.
1.1.26 "Maturity Date" means March 30, 2001, the date on which
the Principal Indebtedness and all accrued and unpaid interest shall be due and
owing.
1.1.27 "Note" means the Promissory Note dated the Closing Date
and executed in connection with the Loan.
1.1.28 "Permitted Encumbrances" means the liens and
encumbrances that have been approved by Lender to appear as exceptions to title
in the Title Policy, pursuant to Lender's escrow instruction letter to the Title
Company executed in connection with the Loan and delivered to the Title Company,
and any other title matters approved by Lender in writing during the term of the
Loan.
1.1.29 "Principal Amount" means Fifteen Million Dollars
($15,000,000.00).
1.1.30 "Principal Indebtedness" means the Principal Amount
together with any additional advances, if any, and any additional amounts
advanced by Lender, if any, pursuant to the Loan Documents.
1.1.31 "Project" means the Property together with all
improvements on the Property, including all buildings.
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1.1.32 "Property" means the leasehold interest of Borrower in
that certain real property located in Salt Lake County, State of Utah, as that
property is described on the attached Exhibit A which is incorporated into this
Agreement by this reference.
1.1.33 "SNDA" means any Subordination, Non-Disturbance and
Attornment Agreement satisfactory in form and content to Lender and Lender's
counsel, from each tenant holding a leasehold interest in all or any part of the
Project.
1.1.34 "Title Commitment" means the commitment for title
insurance described in Section 4.2 of this Agreement.
1.1.35 "Title Company" means Landmark Title Company,
whose address is Plaza 7-21, 675 East 2100 South, Suite 200, Salt Lake City,
Utah 84106.
1.1.36 "Title Policy" means the policy of title insurance
described in Section 5.10 of this Agreement.
1.1.37 "Trust Deed" means the Term Loan Trust Deed, Assignment
of Rents, Security Agreement and Fixture Filing dated the Closing Date and
entered into in connection with the Loan which encumbers the Property.
1.1.38 "UCC-1 Financing Statement" means collectively the
UCC-1 Financing Statements dated the Closing Date and entered into in connection
with the Loan.
ARTICLE 2
AMOUNT AND TERMS OF LOAN
2.1 Nature and Duration of Loan. The Loan shall be a revolving loan
payable in full upon the date and upon the terms and conditions provided in the
Note. Lender and Borrower intend the Loan to be in the nature of a line of
credit under which Borrower may repeatedly draw funds on a revolving basis in
accordance with the terms and conditions of this Agreement and the Note. The
right of Borrower to draw funds and the obligation of Lender to advance funds
shall not accrue until all of the conditions set forth in Article 4 of this
Agreement (except as otherwise specified in Sections 4.4 and 4.5 of this
Agreement) have been fully satisfied, and shall terminate: (a) upon occurrence
of an Event of Default, or (b)upon maturity of the Note, unless the Note is
renewed or extended by Lender in which case such termination shall occur upon
the maturity of the final renewal or extension of the Note. Upon such
termination, at the election of Lender, any and all amounts owing to Lender
pursuant to the Note and this Agreement shall thereupon be due and payable in
full.
2.2 Interest Rate and Payment. The Loan shall be payable on the date
and upon the terms and conditions set forth in the Note. Borrower and Lender
agree that if any of the financial covenants for Tier I financing, as set forth
in Section 5.15 of this Agreement, are not fully and timely met, the interest
rate set forth in the Note shall be increased pursuant to the terms and
conditions set forth in the Note until such time, if ever, that Borrower
complies with all of said Tier I financing covenants.
2.3 Loan Fees.
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2.3.1 Origination Fee. Borrower agrees to pay to Lender from
the Loan proceeds, as a non-refundable fee for originating the Loan, an amount
equal to Three Hundred Thousand Dollars ($300,000.00), which sum is to be paid
on the Closing Date.
2.3.2 Quarterly Fees. If Borrower fails to fully or timely
meet any of the financial covenants for Tier I financing as set forth in Section
5.15 of this Agreement, Borrower shall pay to Lender from the Loan proceeds, as
a non-refundable fee, an amount equal to one-half of one percent (.50%) of the
Committed Amount within ten (10) days following Lender's delivery of a written
notice of assessment of such fee following the end of each quarter during the
term of the Loan during which time the Tier I financial covenants were not met.
"Committed Amount" shall mean the full amount of the Note then disbursed and
outstanding at the end of each quarter, as well as those amounts still held by
Lender and intended to be disbursed pursuant to the terms and conditions of this
Agreement.
2.4 Collateral. In addition to all other collateral described in any of
the Loan Documents, the Loan shall be secured by the following documents and all
of the collateral described in each of the following documents (the
"Collateral"):
2.4.1 Trust Deed. The Trust Deed.
2.4.2 Assignment of Ground Lease. The Assignment of Ground
Lease.
2.4.3 Assignment of Leases. The Assignment of Leases.
2.4.4 UCC-1 Financing Statement. The UCC-1 Financing
Statement.
2.5 Business Credit Card Obligations. In addition to the Loan, Borrower
shall grant to Lender a security interest in the Collateral to secure the full
and timely performance of all business credit card obligations heretofore or
hereafter undertaken by Borrower in favor of Lender pursuant to all business
bank card accounts issued by Lender to, at the request of, or for the benefit
of, Borrower.
2.6 Letter of Credit Facility. Borrower is authorized to utilize the
Loan for the purpose of obtaining the issuance of one or more letter(s) of
credit by Lender, up to an aggregate amount of Seven Million Dollars
($7,000,000) for use in Borrower's business operations. Upon issuance of any
letter of credit and continuing until the cancellation or termination thereof,
Lender shall reserve the amount of the letter of credit from the Loan proceeds,
which reserved amount shall not be available for other Borrower draws or
advances, whether or not any claim is actually made against the letter of
credit. Any amount reserved for a letter of credit facility shall not bear
interest unless and until any amounts are drawn thereon and then only to the
extent of said draws. In addition to any fees assessed under the Letter of
Credit Reimbursement Agreement to be executed by Borrower with issuance of any
letter of credit, Borrower shall pay to Lender a fee upon the issuance of any
letter of credit which shall be calculated as follows:
(a) If Borrower has fulfilled all of the Tier I financial
covenants set forth in Section 5.15 of this Agreement for the
immediately preceding quarter, Borrower shall pay a fee equal to two
percent (2%) per annum of the amount of said letter of credit.
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(b) If Borrower has failed to fulfill all of the Tier I
financial covenants set forth in Section 5.15 of this Agreement for the
immediately preceding quarter, Borrower shall pay a fee equal to four
and one-half percent (4.5%) per annum of the amount of said letter of
credit.
(c) If, having received the preferential pricing of the letter
of credit issuance fee, Borrower thereafter fails to maintain
compliance with all Tier I financial covenants set forth in Section
5.15 of this Agreement in any future quarter during the term of the
letter of credit, Borrower shall pay an additional fee of two and
one-half percent (2.5%) per annum of the amount of said letter of
credit.
The maturity of any letter of credit issued pursuant to this Section
2.6 may extend at the election of Borrower up to ninety (90) days beyond the
maturity date of the Loan. However, any such extension shall not effect any
extension upon any other obligation or other covenant under taken by Borrower in
the Loan Documents, except as specifically set forth in those certain documents
executed concurrently with the issuance of the letter of credit.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Lender:
3.1 Organization and Qualification. Borrower is a corporation duly
organized and existing in good standing under the laws of the State of Utah.
Except as set forth on the attached Exhibit B which is incorporated herein by
this reference, Borrower is duly qualified to do business in each jurisdiction
where the conduct of its business requires qualification, except as where the
failure to be so qualified would not have a material adverse effect on
Borrower's business. Borrower has the full power and authority to own its
properties and to conduct the business in which it engages and to enter into and
perform its obligations under the Loan Documents, and all agreements, documents,
obligations, and transactions contemplated by this Agreement.
3.2 Authorization. The execution, delivery, and performance by Borrower
of the Loan Documents and all agreements, documents, obligations, and
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Borrower and are not inconsistent with
Borrower's organizational documents or any resolution of the board of directors,
members, partners, or trustees, as the case may be, of Borrower, do not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract, or other instrument to which Borrower is a party or by which
Borrower is bound, and that upon their execution and delivery the Loan Documents
will constitute legal, valid, and binding agreements and obligations of
Borrower, enforceable in accordance with their respective terms.
3.3 Pending Litigation. There is no action, suit or proceeding pending
against or to the best of Borrower's knowledge, threatened, against or affecting
Borrower or the Property, in any court of law or equity or before any
governmental or quasi-governmental instrumentality, whether federal, state,
county or municipal, which would materially and adversely affect Borrower's
ability to perform under the Loan Documents.
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3.4 Tax Returns. To the best of Borrower's knowledge, all state and
federal tax returns and reports of Borrower required by law to be filed have
been duly filed and all material taxes, assessments, and other governmental
charges upon Borrower and upon Borrower's properties, assets or income and upon
the Property, which are due and payable, have been paid and shall continue to be
so paid.
3.5 Compliance with Laws. The Project is in compliance with all
applicable environmental protection (including, without limitation, wetlands and
endangered species protection), use and building codes, planning, subdivision
covenants, conditions, and restrictions recorded against the Property, laws,
regulations and ordinances, including, without limitation to the extent
applicable, the Miller Act (40 USC Section 270a and following), the Davis-Bacon
Act (40 USC Section 276a and following), and all other federal law applicable to
federal projects, and Borrower has no knowledge or notice of any violation of
any laws, ordinances, codes, requirements or orders of any governmental
instrumentality having jurisdiction of the Property, including, without
limitation, all applicable federal, state and local laws, rules, ordinances and
regulations relating to the use, storage, transportation, and disposal of any
Hazardous Materials on, in or under the Project, and all applicable federal,
state and local laws, rules, ordinances and regulations relating to wetlands or
endangered species protection and the effect of the development, construction
and use of the Project on any wetlands or endangered species. Borrower has no
knowledge of any actions or proceedings pending before any court or
administrative agency with respect to the validity of such laws, regulations and
ordinances or with respect to any certificates issued thereunder.
3.6 Financial Statements and Other Information. Borrower has provided
Lender with copies of its audited financial statements (the "Audited Financial
Statements") for the fiscal year ended December 31, 1999. The audited
consolidated financial statements of Borrower included in the Form 10-K filed
with the Securities and Exchange Commission on March 30, 2000 (the "Form 10-K")
fairly present, in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis, the consolidated financial position of
Borrower as at the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended. No material adverse change has
occurred in the financial condition of Borrower reflected in the Form 10-K since
the dates thereof and no additional borrowings in excess of $600,000.00 have
been made by Borrower since the dates thereof, other than the borrowing
contemplated hereby. All other documents and information delivered to Lender by
Borrower are accurate in all respects to Borrower's best knowledge.
3.7 Hazardous Materials and Wetlands. No Hazardous Materials other than
as set forth in the Environmental Report are now located on the Property, and
neither Borrower nor any other person has ever caused or permitted any Hazardous
Materials to be placed, held, located or disposed of on, under or at the
Property, or any part thereof, in each case, except in full compliance with all
applicable Environmental Laws. To the best of Borrower's knowledge, no
investigation, administrative order, consent order and agreement, litigation or
settlement with respect to Hazardous Materials is proposed, threatened,
anticipated or in existence with respect the Property. The representations and
warranties contained in this Section 3.7 shall survive the reconveyance of the
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Trust Deed. There are no wetlands on the Property, as wetlands are regulated
pursuant to Section 404 of the Federal Water Pollution Control Act (Clean Water
Act), and the regulations promulgated under the statute or its successor
statute.
3.8 Title to Property. To the best of Borrower's actual knowledge,
Ground Lessor has good and marketable title to the Property, subject to the
terms and conditions of the Ground Lease. Borrower has a leasehold interest in
the Property under the Ground Lease, subject only to the Permitted Encumbrances.
The Property, and any and all improvements thereon, are free and clear of all
liens and encumbrances, excepting the Permitted Encumbrances.
3.9 Commission. No brokerage or other fee, commission or compensation
is to be paid by Lender, and Borrower hereby indemnifies Lender against any and
all claims for brokerage fees or commissions which may be asserted against
Lender, and hereby agrees to pay all expenses incurred by Lender in connection
with the defense of any action or proceeding brought to collect any such
brokerage fees or commissions, including but not limited to costs and attorneys
fees.
3.10 Americans with Disabilities Act. The Project is accessible to and
usable by persons with disabilities pursuant to the accessibility requirements
of the Americans With Disabilities Act (the "Act"), and all applicable
regulations promulgated by the U.S. Architectural and Transportation Barriers
Compliance Board, by the U.S. Department of Justice, and by all other applicable
agencies. The Project will comply with all accessibility requirements of the Act
and regulations, together with the requirements of the Americans With
Disabilities Act Accessibility Guidelines for Buildings and Facilities.
ARTICLE 4
CONDITIONS PRECEDENT TO DISBURSEMENT
As a condition precedent to the first disbursement of any Loan
proceeds, all of the following conditions must be fully satisfied as determined
by Lender, in Lender's sole discretion:
4.1 Authority. Borrower has delivered to Lender a copy of Borrower's
organizational documents, together with all amendments, and an original
officer's certificate regarding the resolutions of Borrower's Board of Directors
which is acceptable to Lender. Borrower also has delivered to Lender such other
evidence of Borrower's good standing and authority as Lender may request.
4.2 Title Commitment. Borrower has delivered to Lender a current
commitment for title insurance No. 24036 on March 20, 2000, which has been
deemed satisfactory to Lender, in Lender's sole discretion, respecting the
Project from the Title Company on a current ALTA extended form coverage basis
which is acceptable to Lender (the "Title Commitment"). The Title Commitment
shall have attached copies of all instruments which appear as exceptions to
title in the Title Commitment. The Title Commitment shall also include a
judgment search respecting Borrower and any other party that holds title to all
or any portion of the Project.
4.3 Opinion of Counsel. If required by Lender, Borrower has delivered
to Lender an opinion from Borrower's counsel in form and content satisfactory to
Lender.
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4.4 Appraisal. Borrower shall deliver the Appraisal to Lender within
ninety (90) days after the Closing Date. The Appraisal shall be prepared by a
certified general M.A.I. appraiser satisfactory to Lender.
4.5 Environmental Report. Borrower shall deliver to Lender within
ninety (90) days after the Closing Date, the Environmental Report satisfactory
to Lender evidencing that there is no Hazardous Material on the Property and
certifying that the Property will not be affected by any environmental
regulations or ordinances of any municipal or state agency or board.
4.6 Delivery of Loan Documents. All of the Loan Documents requested by
Lender have been fully executed and the original executed documents delivered to
Lender.
4.7 Recording and Filing of Loan Documents. All of the Loan Documents
which require filing or recording have been properly filed and recorded so that
all of the liens and security interests granted to Lender in connection with the
Loan will be properly created and perfected and be first priority liens on the
Collateral.
4.8 First Lien on Collateral. The Trust Deed and other applicable Loan
Documents shall constitute and create a valid first lien upon the Collateral,
free of any prior mechanic's liens or materialmen's liens or special assessments
for work completed or under construction on or before the Closing Date, subject
only to the Permitted Encumbrances.
4.9 Ground Lease. Borrower has provided Lender with evidence
satisfactory to Lender that the Ground Lease is in full force and effect and
that no default has occurred under the Ground Lease and no events have occurred
nor do any conditions exist which with the giving of notice, the passage of
time, or both, would constitute a default under the Ground Lease. Borrower has
delivered to Lender the fully executed Ground Lease Estoppel Certificate from
Ground Lessor.
4.10 Leases. Borrower has entered into binding and enforceable leases
for all or a portion of the Project upon terms and in a form acceptable to
Lender, in Lender's sole discretion (the "Leases"). Borrower has delivered to
Lender a copy of all Leases and evidence satisfactory to Lender that the Leases
are in full force and effect and no event has occurred or condition exists which
with the passage of time, the giving of notice, or both, would constitute a
default under any of the Leases.
ARTICLE 5
COVENANTS OF BORROWER
Borrower agrees and covenants with Lender as follows:
5.1 Assignment. Borrower shall not, without the prior written consent
of Lender, mortgage, assign, convey, transfer, sell or otherwise dispose of or
encumber the Project, Borrower's interest in the Project, or any part of the
Project, or the income to be derived from the Project.
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5.2 Right of Inspection. Lender or Lender's agents shall at all times
during the term of the Loan and at Borrower's expense have the right of entry
upon and have free access to the Project and have the right to inspect all
books, contracts and records of Borrower relating thereto.
5.3 Insurance. Borrower shall provide and maintain, or cause to be
provided and maintained, at all times, the insurance policies required to be
provided and maintained pursuant to the Ground Lease, and the following
insurance policies:
5.3.1 Liability Insurance. Bodily injury and general liability
insurance with a single limit per accident or occurrence of not less than
$1,000,000.00 acceptable to Lender insuring against any and all liability of the
insured with respect to the Project or arising out of the maintenance, use or
occupancy thereof.
5.3.2 Property Hazard Insurance. Multi-peril property damage
insurance, including, without limitation, fixtures and personal property to the
extent they are maintained on the Property, and providing, as a minimum, fire
and extended coverage (including all perils normally covered by the standard
"all risk" endorsement, if such is available) on a full replacement cost basis
in an amount not less than 100% of the insurable value of the improvements,
exclusive of the Property, foundations and other items normally excluded from
coverage (based upon current replacement cost), with a single limit per accident
or occurrence of not less than $1,000,000.00.
5.3.3 Worker's Compensation Insurance. Worker's compensation
insurance against liability from claims of worker's with respect to and during
the period of any work on or about the Property. Borrower shall require the
Contractor and each of Borrower's subcontractors employed to perform work on the
Property to deliver a certificate of worker's compensation insurance prior to
the commencement of any work on the Property.
5.3.4 Flood Insurance. Flood insurance covering either the
Principal Amount or the maximum amount of insurance available, whichever is
more, or in lieu of such flood insurance, evidence, satisfactory to Lender, that
no part of the Project is, or will be, within an area designated as a flood
hazard area by the Federal Insurance Administration, Department of Housing and
Urban Development.
5.3.5 Policies and Premiums. All policies of insurance
required pursuant to this Section 5.3 shall be in form and substance acceptable
to Lender and issued by insurance companies acceptable to Lender. No insurance
company shall be acceptable to Lender unless it has a company rating of not less
than "A" and a financial rating of not less than Class VII in the most recent
edition of "Best's Insurance Reports". All policies of insurance required
pursuant to the provisions of this Section 5.3 shall contain a standard
"mortgagee protection clause", shall have attached a "lender's loss payable
endorsement", and shall name Lender as an additional insured or loss payee, as
appropriate. All such policies shall contain a provision that such policies will
not be cancelled or materially amended by reduction of coverage by more than ten
percent (10%) without at least thirty (30) days prior written notice to Lender.
11
If Lender consents to Borrower providing any of the required insurance
through blanket policies carried by Borrower and covering more than one
location, then Borrower shall cause the insurance company to deliver to Lender a
certificate of insurance in the form ACORD 27 of such policy which sets forth
the coverage, the limits of liability, the name of the carrier, the policy
number, expiration date and a statement that the insurance company will not
cancel or materially modify by reduction of coverage by more than ten percent
(10%) the coverage evidenced by the endorsement without first affording Lender
at least thirty (30) days prior written notice. In the event Borrower fails to
provide, maintain, keep in force or deliver to Lender the policies of insurance
required by this Section 5.3, Lender may, but without any obligation to do so,
procure such insurance for such risks covering Lender's interest and Borrower
shall pay all premiums thereon promptly upon demand by Lender. If Borrower fails
to pay any premiums after demand by Lender, Lender, at Lender's option, may
advance any sums necessary to maintain and to keep in force such insurance. Any
sums so advanced, together with interest on such sums at the then current rate
under the Note, shall be secured by the Trust Deed.
Borrower shall deliver to Lender a copy of the original of each of the
policies of insurance that Borrower is required to obtain and maintain, or cause
to be provided and maintained, under this Agreement.
5.4 Repair and Restoration. If the Project is partially or wholly
damaged or destroyed by fire or any other cause, and (a) all insurance proceeds
received by Lender together with any cash funds delivered by Borrower to Lender
are sufficient to fully restore and repair the Project as determined by Lender,
in Lender's sole discretion, and (b) Borrower is not in default under any of the
Loan Documents, Lender shall disburse such proceeds in the manner provided
herein for the disbursement of the proceeds of the Loan toward the cost of such
restoration and repair. If Lender determines that such proceeds together with
any cash funds provided by Borrower are insufficient to fully restore the
Project, Lender will apply any sums received by Lender under this Section first
to the payment of all of Lender's costs and expenses (including but not limited
to legal fees and costs) incurred in obtaining those sums, and then, in Lender's
sole discretion and without regard to the adequacy of its security, to the
payment of the Loan. If the amount of such proceeds exceeds the cost of
restoration of the Project, Lender shall apply the excess proceeds to the
payment of the Loan. If the proceeds of insurance are used to restore the
Project and if the total estimated cost to restore the Project exceeds the
amount of the proceeds of insurance, Borrower shall deliver to Lender prior to
any disbursement of the proceeds of insurance, an amount equal to such
difference in cash or cash equivalents satisfactory to Lender. After all
obligations of Borrower under the Loan Documents have been paid in full, then
all proceeds in excess of such obligations will be paid to Borrower.
5.5 Taxes and Impositions. Borrower shall promptly pay and discharge
all lawful federal and state taxes and assessments imposed upon the Project or
upon Borrower before they become past due and delinquent in accordance with the
procedures and upon the terms set forth in the Trust Deed.
5.6 Hazardous Materials. Borrower shall not cause or permit any
Hazardous Materials to be placed, held, located or disposed of on, under or at
the Project or any part thereof which are in violation of any Environmental Laws
or the Ground Lease. Borrower further agrees to give notice to Lender
immediately upon Borrower's learning of the presence of any Hazardous Materials
12
on the Property, to promptly comply with any governmental requirements requiring
the removal, treatment or disposal of such Hazardous Materials, and to defend,
indemnify and hold harmless Lender from any and all liabilities, claims, losses
or costs (including, without limitation attorneys' fees) which may now or in the
future be paid, incurred or suffered by or asserted against Lender by any
person, entity or governmental agency with respect to the presence of Hazardous
Materials on the Property or discharge of Hazardous Materials from the Property.
Borrower's covenants in this Section shall survive payment of the Loan and
foreclosure or other transfer of the Property.
At any time Lender, in good faith, has reason to believe Hazardous
Materials have been placed, held, located or disposed of on, under or at the
Property or any part thereof, other than as stated in the Environmental Report,
and upon written request by Lender and at Borrower's cost and expense, Borrower
shall provide Lender with an Environmental Compliance Audit Certificate,
effective as of a date no earlier than the date of the notice. Borrower shall
certify to Lender in writing within thirty (30) days of the notice that the
Project is in full compliance with Environmental Laws. In the event Borrower
fails or refuses promptly to provide Lender with an Environmental Compliance
Audit Certificate when required, Lender may, at Borrower's risk and expense,
arrange to obtain such a certificate. In the event the Project is in a condition
such that an Environmental Compliance Audit Certificate cannot be issued,
Borrower agrees, at its own cost and expense, to take all action necessary to
bring the Project into compliance with all Environmental Laws, including all
remediation and clean-up, so an Environmental Compliance Audit Certificate can
be issued. Lender and any consultant retained by or for the benefit of Lender
shall have the right, without further permission from or notice to Borrower, to
enter upon the Project for the purpose of performing any examination or testing
required in order to provide such a certificate, and Borrower shall provide the
consultant with reasonable access to Borrower's records for such purposes. Any
costs incurred by Lender in obtaining such a certificate shall be added to the
Principal Indebtedness and shall be immediately due and payable, and shall bear
interest at the default rate provided in the Note from the date incurred until
paid by Borrower.
5.7 No Disposition or Merger Without Lender's Consent. Borrower shall
not enter into any merger with any third party, or otherwise dispose of an
aggregate of more than ten percent (10%) of the total value of Borrower's assets
as of the date of disposition other than in the ordinary course of Borrower's
business.
5.8 Leases. Borrower shall not enter into any lease or leases of all or
any portion of the Project without the prior written consent of Lender. Borrower
shall maintain all such leases approved by Lender, which shall be included in
the definition of "Leases" under this Agreement, in full force and effect.
Borrower shall notify Lender of any breach of any of the terms and conditions of
any of the Leases within fifteen (15) days of such breach. Borrower agrees that
the Leases shall not be materially amended or modified without the prior written
consent of Lender.
5.9 Financial Statements. Borrower covenants that it shall timely file
with the Securities and Exchange Commission any and all reports required to be
filed pursuant to the Securities and Exchange Act of 1934, as amended, including
any applicable extension period. As to all financial statements and reports
which Borrower has furnished or may in the future furnish to Lender, Borrower
13
acknowledges and agrees that it has a fiduciary duty to ensure that such
statements and reports are accurate and complete.
Until requested otherwise by Lender, Borrower shall provide the
following financial statements and reports to Lender:
5.9.1 Annual Reports. Furnish to Lender promptly following the
filing of such report with the Securities and Exchange Commission (i) a copy of
Borrower's Annual Report on Form 10-K for each fiscal year; and (ii) copies of
any final management letters or other final reports and schedules submitted by
Borrower's officers to Borrower's Board of Directors, which shall include a
consolidated balance sheet as of the end of such fiscal year, a consolidated
statement of income and a consolidated statement of cash flows of Borrower and
its subsidiaries for such year, setting forth in each case in comparative form
the figures from Borrower's previous fiscal year, all prepared in accordance
with generally accepted accounting principles and practices, consistently
applied, and audited by nationally recognized independent certified public
accounts. If Borrower is no longer required to file Annual Reports on Form 10-K,
Borrower shall, within ninety (90) days following the end of each respective
fiscal year, deliver to Lender a copy of such balance sheets, statements of
income and statements of cash flows.
5.9.2 Quarterly Reports. Furnish to Lender promptly following
the filing of such report with the Securities and Exchange Commission, a copy of
each of Borrower's Quarterly Reports on Form 10-Q, which shall include a
consolidated balance sheet as of the end of the respective fiscal quarter, a
consolidated statement of income and consolidated statements of cash flows of
Borrower and its subsidiaries for the respective fiscal quarter and for the
year-to-date, setting forth in each case in comparative form the figures from
the comparable periods in Borrower's immediately preceding fiscal year, all
prepared in accordance with generally accepted accounting principals and
practices (except as otherwise permitted by Form 10-Q), consistently applied,
but all of which may be unaudited. If Borrower is no longer required to file
Quarterly Reports on Form 10-Q, Borrower shall, within forty-five (45) days
following the end of each of the first three (3) fiscal quarters of each fiscal
year, deliver to Lender a copy of such balance sheets, statements of income and
statements of cash flows.
5.9.3 Monthly Reports. Monthly financial statements, limited
to an aging of payables and receivables, prepared by Borrower for each calendar
month in a form acceptable to Lender, shall be delivered to Lender within ten
(10) days of the end of each month during the term of the Loan. The complete
monthly financial statements shall be delivered to Lender within forty-five (45)
days of the end of each month (excepting sixty (60) days for December), which
shall be prepared consistently with accounting standards acceptable to Lender,
and shall accurately represent the actual financial condition of Borrower as of
the date thereof, and accurately represent the results of operations for the
period covered thereby.
5.9.4 Compliance Certificate. Concurrently with the submission
of the Form 10-Q, Borrower shall submit to Lender a compliance certificate in a
form acceptable to Lender certifying that Borrower is in compliance with all
terms and conditions of this Agreement, including compliance with the financial
covenants provided in this Section 5.9. The compliance certificate shall include
the data and calculations supporting all financial covenants, whether in
compliance or not, and shall be signed by the chief executive officer,
treasurer, or chief financial officer of Borrower.
14
If any financial reports required to be provided by this Section 5.9
are not timely provided to Lender, then there shall be immediately due and owing
from Borrower to Lender a late fee of $100.00 per day for each delinquent
financial report, which late fee shall be payable in cash. Nothing in this
Section 5.9 shall be construed to alter, impair or infringe upon Lender's right
to declare an Event of Default as provided in this Agreement or to alter or
extend the time limits for cure of a non-monetary default as provided in Article
6 of this Agreement.
5.10 Title Policy. Within ten (10) days after the Closing Date,
Borrower shall deliver to Lender a policy of title insurance on the Property
which shall (a) be an ALTA extended coverage mortgagee's policy, (b) show Ground
Lessor as the sole owner of marketable, fee simple title to the Property and
Borrower as the sole ground lessee of the Property, (c) be in the total amount
of the Principal Amount, and (d) be issued by a title insurance company
satisfactory to Lender through the Title Company (the "Title Policy"). The Title
Policy shall insure that the Trust Deed is a valid first mortgage lien against
the Property and that the Property is free and clear of all liens, encumbrances
and other exceptions to title, except the Permitted Encumbrances. The Title
Policy shall include such additional terms and special endorsements upon
issuance as may be required by Lender, including, but not limited to, a
foundation endorsement (CLTA 102.5 or its equivalent) to the Title Policy
showing no encroachments.
5.11 Required Notices. Borrower shall give Lender prompt written
notice of the following:
5.11.1 Any asserted litigation of any kind which might subject
Borrower to any liability in an aggregate amount in excess of $1,000,000.00,
whether covered by insurance or not and any litigation involving the Property.
5.11.2 All complaints and charges made by any governmental
agency affecting the Property or exercising supervision or control of Borrower
or Borrower's business which may impair the security of Lender.
5.11.3 Any acceleration of any other indebtedness incurred by
Borrower.
5.11.4 Any event or conditions which constitute an Event of
Default or, with the passage of time or the giving of notice, or both, would
constitute an Event of Default.
5.11.5 Any material adverse change in the financial condition
of Borrower.
5.12 Change of Business. Borrower shall not materially modify or change
the nature or type of its business without the prior written consent of Lender.
5.13 Dividends and Loans. Borrower shall not (a) declare or pay any
dividends except as are mandatorily required on Borrower's preferred stock, (b)
purchase, redeem, retire or otherwise acquire for value any of its capital stock
now or hereafter outstanding in excess of $2,000,000.00 for any year, (c) make
any distribution of assets to its stockholders, investors, or equity holders,
whether in cash, assets, or in obligations of Borrower, (d) allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption, or retirement of any shares of its capital
15
stock or equity interests in excess of $2,000,000.00 for any year, or (e) make
any other distribution by reduction of capital or otherwise in respect of any
shares of its capital stock or equity interests, in excess of $250,000.00. It is
expressly agreed upon between Borrower and Lender that this covenant does not
apply to any distributions made by Borrower to any of Borrower's non-borrowing
subsidiaries.
Borrower shall not make any loans or pay any advances of any nature
whatsoever to any person or entity, except advances in the ordinary course of
business to vendors, suppliers, and contractors. This covenant does not apply to
any loans or advances made by Borrower to any of Borrower's non-borrowing
subsidiaries.
5.14 Restriction of Debt. Except for the Trust Deed, during the term of
the Loan, Borrower shall not, without the prior written consent of Lender,
create, incur, assume, or suffer to exist any debt or any encumbrance, mortgage
or lien upon the Project except as permitted by this Section 5.14. Debt means
(1) indebtedness or liability for borrowed money; (2) obligations evidenced by
bonds, debentures, notes, or other similar instruments; (3) obligations for the
deferred purchase price of property or services (including trade obligations);
(4) obligations as lessee under capital leases; (5) current liabilities in
respect of unfunded vested benefits under Plans covered by ERISA; (6)
obligations under letters of credit; (7) obligations under acceptance
facilities; (8) all guarantees, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any person
or entity, or otherwise to assure a creditor against loss; and (9) obligations
secured by any mortgage, deed of trust, lien, pledge, or security interest or
other charge or encumbrance on property, whether or not the obligations have
been assumed.
Permitted exceptions to this covenant are: (1) debt contemplated by
this Agreement; (2) accounts payable to trade creditors for goods or services
which are not aged more than ninety (90) days from the due date (provided that
the due date is not more than sixty (60) days after the original invoice date)
to the extent that such accounts payable in excess of ninety (90) days past due
do not exceed twenty-five percent (25%) of the total accounts payable to trade
creditors; (3) current operating liabilities (other than for borrowed money)
which are not more than ninety (90) days past due, in each case incurred in the
ordinary course of business, as presently conducted, and paid within the
specified time, unless contested in good faith and by appropriate proceedings;
(4) debt due not in excess of $2,000,000.00 and not to exceed an aggregate,
outstanding principal amount of $2,000,000.00, for purchase money capital
leases; and (5) draws under the letter of credit or surety bond facilities
either heretofore arranged or anticipated to be established with First Security
Bank ($5,000,000.00) and AIG Insurance Company ($10,000,000.00). New or
replacement real property leases and operating leases are exempt from the
$2,000,000.00 limitation of this exception.
5.15 Net Earnings. Borrower shall achieve net after tax earnings
(losses) in each quarter during the term of the Loan so that on a cumulative
basis, the net year to date profit (loss) shall not be less (greater) than the
following amounts at each respective quarter end:
16
Tier First Quarter Second Quarter Third Quarter Fourth Quarter
2000 2000 2000 2000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Tier I (3,750,000) (3,000,000) (1,750,000) 2,500,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Tier II (4,250,000) (3,750,000) (3,750,000) (3,250,000)
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Borrower and Lender agree that if during any quarter of the term of the
Loan, Borrower fails to fully keep the covenants of Tier I financing as set
forth in this Section 5.15, Borrower, with respect to such non-qualifying
quarter, shall be subject to the interest rate and quarterly fee assessments for
Tier II financing as set forth in Sections 2.2 and 2.3.2 of this Agreement. If
at any time during the term of the Loan, Borrower fails to fully satisfy any of
the Tier II financial covenants, such violation shall constitute an Event of
Default under this Agreement and no further draws under the Loan shall be
allowed.
5.16 Net Working Capital. Borrower shall achieve and maintain minimum
Net Working Capital at each quarter end of the year 2000 as follows: (i)
$90,000,000 for the first quarter, (ii) $90,000,000 for the second quarter,
(iii) $95,000,000 for the third quarter, and (iv) $100,000,000 for the fourth
quarter. For purposes of this Section 5.16, net working capital is defined as
adjusted current assets less current liabilities. Adjusted current assets is
defined as current assets less that portion of unbilled costs which exceeds the
maximum unbilled costs allowed in each quarter as shown below:
First Quarter Second Quarter Third Quarter Fourth Quarter
2000 2000 2000 2000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Maximum Unbilled Costs 90,000,000 80,000,000 70,000,000 70,000,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
5.17 Limitations on Advances Under the Note. Notwithstanding anything
to the contrary in this Agreement, the Note, or any other Loan Document,
Borrower and Lender agree as follows: (i) At no time during the term of the Loan
shall any advances be made, or total amounts outstanding under the Loan, exceed
the amount of seventy percent (70%) of the gross trade accounts receivable owned
by Borrower, excluding any and all trade accounts receivable of Borrower's
subsidiaries and affiliates; and (ii) In no event shall the Loan to value ratio,
based on the Appraisal value of the Property, exceed the sum which is equal to
sixty percent (60%) of the Appraisal value of the Property.
ARTICLE 6
EVENTS OF DEFAULT
6.1 Event of Default. Fifteen (15) days after written notice from
Lender to Borrower for monetary defaults and thirty (30) days after written
notice from Lender to Borrower for non-monetary defaults, if such defaults are
not cured within such fifteen (15) day or thirty (30) day periods, respectively,
each of the following shall constitute an event of default ("Event of Default")
under this Agreement:
17
6.1.1 Default in Payment. If Borrower fails to make any
payment due and payable under the terms of the Note, this Agreement or any other
Loan Document.
6.1.2 Representations and Warranties. If any of the
representations and warranties made by Borrower in this Agreement, or in any
other Loan Document, shall be materially false or misleading at any time during
the term of the Loan.
6.1.3 Covenants. If Borrower shall be in default under any of
the terms, covenants, conditions, or obligations in this Agreement, or in any
other Loan Document, including, but not limited, the financial covenants set
forth in Sections 5.15 and 5.16 of this Agreement.
6.1.4 Cross Default. If a default occurs or any event occurs
or condition exists, which with the passage of time, the giving of notice, or
both, would constitute a default, occurs on any indebtedness of Borrower to
Lender under any note, indenture, agreement, or undertaking, including, but not
limited to, Borrower's business bank cards.
6.1.5 Leases. If a default on the part of Borrower occurs
under any of the Leases, or any event occurs or condition exists, which with the
passage of time, the giving of notice, or both, would constitute a default under
any of the Leases.
6.1.6 Ground Lease. If any default on the part of Borrower
occurs under the Ground Lease, or any event occurs or condition exists, which
with the passage of time, the giving of notice, or both, would constitute a
default under the Ground Lease.
6.1.7 Dissolution. If Borrower becomes dissolved or
terminated.
6.1.8 Receiver. If a receiver, trustee, or custodian is
appointed for any material part of Borrower's property, or any material part of
Borrower's property is assigned for the benefit of creditors.
6.1.9 Impairment to Lien. If at any time the Trust Deed or any
other applicable Loan Document creating a lien on any of the Collateral may be
impaired by any lien, encumbrance or other defect other than the Permitted
Encumbrances.
6.1.10 Bankruptcy. If a petition in bankruptcy is filed
against Borrower, and such petition is not dismissed within one hundred twenty
(120) days of filing, a petition in bankruptcy is filed by Borrower or any
Guarantor of the Loan or a receiver or trustee of the property of Borrower is
appointed; or if Borrower files a petition for reorganization under any of the
provisions of the Bankruptcy Act or any law, State or Federal, or makes an
assignment for the benefit of creditors or is adjudged insolvent by any State or
Federal Court of competent jurisdiction.
6.1.11 Judgment or Attachment. If a judgment is entered
against Borrower or any attachment be made for an amount in excess of
$100,000.00 and such judgment or attachment is not paid or otherwise fully
satisfied within thirty (30) days of the date it is entered, or appealed to the
appropriate appellate court and obtains a stay from the execution on said
judgment by the posting of a supersedeas bond.
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ARTICLE 7
REMEDIES
7.1 Termination and Acceleration. Upon the occurrence of an Event of
Default under this Agreement, all obligations of Lender under this Agreement,
and under the other Loan Documents at the election of Lender, shall cease and
terminate and Lender may declare the entire unpaid Principal Indebtedness
immediately due and payable and may foreclose the Trust Deed and any other
Collateral in accordance with the Loan Documents, and exercise all remedies
available to a mortgagee under the Ground Lease, and may apply the undisbursed
Loan proceeds against the Principal Indebtedness owed to Lender by Borrower.
7.2 Rights and Remedies Cumulative. All rights, remedies, and powers
conferred in this Agreement are cumulative and not exclusive of any other rights
or remedies, and shall be in addition to every other right, power, and remedy
that Lender may have, whether specifically granted in this Agreement, the Ground
Lease, or existing at law, in equity, or by statute; and any and all such rights
and remedies may be exercised from time to time and as often and in such order
as Lender may deem expedient. Any forbearance or delay by Lender in exercising
any of its rights, remedies, and powers shall not be deemed to be a waiver and
the exercise or partial exercise of any right, remedy, or power, and shall not
preclude the further exercise of such right, remedy, and power and the same
shall continue in full force and effect until specifically waived by an
instrument in writing executed by Lender.
7.3 Attorney-in-Fact. Upon the occurrence of an Event of Default,
Borrower hereby irrevocably constitutes and appoints Lender Borrower's true and
lawful attorney-in-fact to execute, acknowledge and deliver any instruments with
respect to the Loan, except to increase the Principal Amount thereof for any
purpose other than the protection of the Collateral and Lender's interest
therein. This power of attorney is irrevocable and is coupled with an interest.
ARTICLE 8
ARBITRATION
8.1 Arbitration Disclosures.
8.1.1 ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND
SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
8.1.2 EXCEPT AS OTHERWISE PROVIDED IN SECTION 8.2.4 OF THIS
AGREEMENT, IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
8.1.3 DISCOVERY IN ARBITRATION IS MORE LIMITED THAN
DISCOVERY IN COURT.
8.1.4 ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS
OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO SEEK MODIFICATION
OF ARBITRATORS' RULINGS IS VERY LIMITED.
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8.1.5 A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO
IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY.
8.1.6 IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR
ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.
8.2 Arbitration Provisions. This concerns the resolution of any
claim or controversy between or among the parties. In this regard:
8.2.1 Any claim or controversy ("Dispute") between or among
the parties, and their assigns, including, but not limited to, Disputes arising
out of or relating to the Loan, the Collateral, this Agreement, the Note, the
Loan Documents, this Article 8 Arbitration ("arbitration clause"), or any
related agreements or instruments relating hereto or delivered in connection
herewith ("Related Documents"), and including, but not limited to, a Dispute
based on or arising from an alleged tort, shall at the request of any party be
resolved by binding arbitration in accordance with the applicable arbitration
rules of the American Arbitration Association ("the Administrator"). The
provisions of this arbitration clause shall survive any termination, amendment,
or expiration of this Agreement or Related Documents. The provisions of this
arbitration clause shall supercede any prior arbitration agreement between or
among the parties. If any provision of this arbitration clause should be
determined to be unenforceable, all other provisions of this arbitration clause
shall remain in full force and effect.
8.2.2 The arbitration proceedings shall be conducted in Salt
Lake City, Utah, at a place to be determined by the Administrator. The
Administrator and the arbitrator(s) shall have the authority to the extent
practicable to take any action to require the arbitration proceeding to be
completed and the arbitrator(s)' award issued within one-hundred-fifty (150)
days of the filing of the Dispute with the Administrator. The arbitrator(s)
shall have the authority to impose sanctions on any party that fails to comply
with time periods imposed by the Administrator or the arbitrator(s), including
the sanction of summarily dismissing any Dispute or defense with prejudice. The
arbitrator(s) shall have the authority to resolve any Dispute regarding the
terms of this Agreement, this arbitration clause or Related Documents, including
any claim or controversy regarding the arbitrability of any Dispute. All
limitations periods applicable to any Dispute or defense, whether by statute or
agreement, shall apply to any arbitration proceeding hereunder and the
arbitrator(s) shall have the authority to decide whether any Dispute or defense
is barred by a limitations period and, if so, to summarily enter an award
dismissing any Dispute or defense on that basis. The doctrines of compulsory
counterclaim, res judicata, and collateral estoppel shall apply to any
arbitration proceeding hereunder so that a party must state as a counterclaim in
the arbitration proceeding any claim or controversy which arises out of the
transaction or occurrence that is the subject matter of the Dispute. The
arbitrator(s) may in the arbitrator(s)' discretion and at the request of any
party: (1) consolidate in a single arbitration proceeding any other claim or
controversy involving another party that is substantially related to the Dispute
where that other party is bound by an arbitration clause with the Lender, such
as borrowers, guarantors, sureties, and owners of collateral; (2) consolidate in
a single arbitration proceeding any other claim or controversy that is
substantially similar to the Dispute; and (3) administer multiple arbitration
claims or controversies as class actions in accordance with the provisions of
Rule 23 of the Federal Rules of Civil Procedure.
20
8.2.3 The arbitrator(s) shall be selected in accordance with
the rules of the Administrator from panels maintained by the Administrator. A
single arbitrator shall have expertise in the subject matter of the Dispute.
Where three arbitrators conduct an arbitration proceeding, the Dispute shall be
decided by a majority vote of the three arbitrators, at least one of whom must
have expertise in the subject matter of the Dispute and at least one of whom
must be a practicing attorney. The arbitrator(s) shall award to the prevailing
party recovery of all costs and fees (including attorneys' fees and costs,
arbitration administration fees and costs, and arbitrator(s)' fees). The
arbitrator(s), either during the pendency of the arbitration proceeding or as
part of the arbitration award, also may grant provisional or ancillary remedies
including but not limited to an aware of injunctive relief, foreclosure,
sequestration, attachment, replevin, garnishment, or the appointment of a
receiver.
8.2.4 Judgment upon an arbitration award may be entered in any
court having jurisdiction, subject to the following limitation: the arbitration
award is binding upon the parties only if the amount does not exceed Four
Million Dollars ($4,000,000.00); if the award exceeds that limit, either party
may demand the right to a court trial. Such a demand must be filed with the
Administrator within thirty (30) days following the date of the arbitration
award; if such a demand is not made within that time period, the amount of the
arbitration award shall be binding. The computation of the total amount of an
arbitration award shall include amounts awarded for attorneys' fees and costs,
arbitration administration fees and costs, and arbitrator(s)' fees.
8.2.5 No provision of this arbitration clause, nor the
exercise of any rights hereunder, shall limit the right of any party to: (1)
judicially or non-judicially foreclose against any real or personal property
collateral or other security; (2) exercise self-help remedies, including but not
limited to repossession and setoff rights; or (3) obtain from a court having
jurisdiction thereover any provisional or ancillary remedies including but not
limited to injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. Such rights can be exercised at
any time, before or during initiation of an arbitration proceeding, except to
the extent such action is contrary to the arbitration award. The exercise of
such rights shall not constitute a waiver of the right to submit any Dispute to
arbitration, and any claim or controversy related to the exercise of such rights
shall be a Dispute to be resolved under the provisions of this arbitration
clause. Any party may initiate arbitration with the Administrator, however, if
any party initiates litigation and another party disputes any allegation in that
litigation, the disputing party-upon the request of the initiating party-must
file a demand for arbitration with the Administrator and pay the Administrator's
filing fee. The parties may serve by mail a notice of an initial motion for an
order of arbitration.
8.2.6 Notwithstanding the applicability of any other law to
this Agreement, the arbitration clause, or Related Documents between or among
the parties, the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq., shall apply to
the construction and interpretation of this arbitration clause.
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ARTICLE 9
MISCELLANEOUS
9.1 Non-Waiver. No advance of Loan proceeds under this Agreement shall
constitute a waiver of any of the conditions to be performed by Borrower and in
the event Borrower is unable to satisfy any such conditions Lender shall not be
precluded from declaring such failure to be an Event of Default.
9.2 Derivative Rights. Any obligation of Lender to make disbursements
under this Agreement is imposed solely and exclusively for the benefit of
Borrower and no other person, firm or corporation shall, under any
circumstances, be deemed to be a beneficiary of such condition, nor shall it
have any derivative claim or action against Lender.
9.3 Survival. All representations, warranties and covenants by Borrower
shall survive the making of the disbursements under the Loan and the provisions
of this Agreement shall be binding upon Borrower, Borrower's successors and
assigns and inure to the benefit of Lender, Lender's successors and assigns.
9.4 Conflict. The Note, Trust Deed, and all other Loan Documents shall
be subject to all the terms, covenants, conditions, obligations, stipulations
and agreements contained in this Agreement. In the event there is any conflict
between the terms and conditions of this Agreement, the Note, Trust Deed, or any
other Loan Document, this Agreement shall prevail.
9.5 Assignment. Lender may assign the Loan Documents, in whole or in
part, to any other person, firm or corporation provided that all provisions of
this Agreement shall continue to apply in conjunction with the other Loan
Documents. Borrower shall not assign this Agreement, or any interest of Borrower
in or to this Agreement, the Loan proceeds, or any of the Loan Documents without
the prior written consent of Lender. Any dissolution of Borrower or any transfer
of any interest in the Borrower without the prior written consent of Lender
shall be assumed to be an assignment in violation of this Section.
9.6 Notices. All notices shall be in writing and shall be deemed to
have been sufficiently given or served when personally delivered, deposited in
the United States mail, by registered or certified mail, or deposited with a
reputable overnight mail carrier which provides delivery of such mail to be
traced, addressed as follows:
Lender: Zions First National Bank
Commercial Loan Department
P.O. Box 25822
One South Main Street
Salt Lake City, Utah 84125
Attn: Michael R. Brough
With copies to: Callister Nebeker & McCullough
Gateway Tower East, Suite 900
10 East South Temple
Salt Lake City, Utah 84133
Attn: T. Richard Davis
22
Borrower: Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Attn: Chief Financial Officer
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Attn: Treasurer
With copies to: Snell & Wilmer, L.L.P. Law Offices
15 West South Temple, Suite 1200
Gateway Tower West
Salt Lake City, Utah 84101
Attn: Brian D. Cunningham
Such addresses may be changed by notice to the other party given in the same
manner provided in this Section.
9.7 Indemnification. Borrower agrees to pay, protect, defend, indemnify
and hold harmless Lender for any and all claims and liabilities, and for damages
which may be awarded or incurred by Lender, and for all reasonable attorney
fees, legal expenses, and other out-of-pocket expenses incurred in defending
such claims, arising from or related in any manner to the negotiation,
execution, or performance by Lender of this Agreement, the Loan Documents, or
any of the agreements, documents, obligations, or transactions contemplated by
this Agreement, including, without limitation, any claims, liabilities, or
causes of actions related to any Hazardous Materials located on, in, or under
the Property, but excluding any such claims based upon breach or default by
Lender or gross negligence or willful misconduct of Lender. This indemnification
shall survive the payment of the Loan, reconveyance of the Trust Deed, and
termination of this Agreement.
Lender shall have the control of the defense of any such claims, but
agrees to act reasonably in the defense of any such claims. Lender is hereby
authorized to settle or otherwise compromise any such claims as Lender in good
faith determines shall be in its best interests.
Any indemnification amount owing to Lender pursuant to this Section 9.7
shall be secured by the Loan Documents and Collateral except that,
notwithstanding anything to the contrary in this Agreement or the Loan
Documents, any such indemnification amount owing to Lender shall not be secured
in any way by the Property on, in or under which any Hazardous Materials is
located.
9.8 Terms. Whenever used in this Agreement, the singular shall include
the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
9.9 Joint and Several Liability. All obligations and liabilities of
Borrower imposed in this Agreement, or in any of the other Loan Documents upon
Borrower shall be joint and several.
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9.10 Multiple Borrowers. If Borrower is comprised of more than one
person or entity, the term Borrower shall refer to each such separate person or
entity, and the obligations of Borrower shall apply individually and
collectively to each such person and entity, unless specifically provided
otherwise in this Agreement.
9.11 Disclosure of Financial and Other Information. Borrower hereby
consents to Lender disclosing to any other lender who may participate in the
Loan, any and all information, knowledge, reports, and records, including,
without limitation, financial statements, relating in any manner whatsoever to
the Loan and Borrower, provided that any other such lender execute a
confidentiality agreement in a form acceptable to Borrower and Lender.
9.12 Invalidity. The invalidity of any one or more or any part of the
conditions, covenants, articles, sections, phrases or sentences of this
Agreement shall not affect the remaining portions of this Agreement.
9.13 Governing Law. This Agreement and all matters relating to this
Agreement shall be governed by, construed and interpreted in accordance with the
laws of the State of Utah.
9.14 No Partnership. Nothing contained in this Agreement or in any of
the other Loan Documents shall be construed as creating a joint venture or
partnership between Borrower and Lender. There shall be no sharing of losses,
costs and expenses between Borrower and Lender, and Lender shall have no right
of control or supervision except as it may exercise its rights and remedies
provided in the Loan Documents.
9.15 Attorneys' Fees. Upon the occurrence of an Event of Default,
Lender may employ an attorney or attorneys to protect Lender's rights under this
Agreement, and Borrower shall pay Lender reasonable attorneys' fees and costs
actually incurred by Lender, whether or not action is actually commenced against
Borrower by reason of such breach. Borrower shall also pay to Lender any
reasonable attorneys fees and costs incurred by Lender with respect to any
insolvency or bankruptcy proceeding or other action involving Borrower or any
guarantor as a debtor. If Lender exercises the power of sale contained in the
Trust Deed or initiates foreclosure proceedings, Borrower shall pay all
reasonable costs incurred and attorney fees and costs as provided in the Trust
Deed.
9.16 Setoff. In addition to any rights and remedies of Lender provided
by law, if any Event of Default exists, Lender is authorized at any time and
from time to time, without prior notice to Borrower, any such notice being
waived by Borrower to the fullest extent permitted by law, to setoff and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held by Lender to or for the credit or the account of Borrower
against any and all obligations of Borrower under the Loan or any of the Loan
Documents, now or hereafter existing, irrespective of whether or not Lender
shall have made demand under the Loan, or otherwise, or under any Loan Document
and although such amounts owed may be contingent or unmatured. Lender agrees
promptly to notify Borrower after any such setoff and application made by
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of Lender under this
Section 9.16 are in addition to the other rights and remedies (including other
rights of setoff) which Lender may have.
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9.17 Waiver of Claims. Borrower (i) represents that Borrower has no
defenses to or setoffs against any indebtedness or other obligations owing to
Lender or Lender's affiliates, nor claims against Lender or Lender's affiliates
for any matter whatsoever, related or unrelated to any indebtedness or other
obligations owing to Lender or Lender's affiliates, and (ii) releases Lender and
Lender's affiliates from all claims, causes of action, and costs, in law or
equity, existing as of the Closing Date, which Borrower has or may have by
reason of any matter of any conceivable kind or character whatsoever, related or
unrelated to any indebtedness or other obligations owing to Lender or Lender's
affiliates, including the subject matter of this Agreement. This provision shall
not apply to claims for performance of express contractual obligations owing to
Borrower by Lender or Lender's affiliates.
9.18 Severability of Invalid Provisions. With respect to this Agreement
and all other Loan Documents, any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.19 Integrated Agreement and Subsequent Amendment. The Loan Documents,
and the other agreements, documents, obligations, and transactions contemplated
by this Agreement constitute the entire agreement between Lender and Borrower
with respect to the subject matter of these agreements, and may not be altered
or amended except by written agreement signed by Lender and Borrower. PURSUANT
TO UTAH CODE SECTION 25-5-4, BORROWER IS NOTIFIED THAT THESE AGREEMENTS ARE A
FINAL EXPRESSION OF THE AGREEMENT BETWEEN LENDER AND BORROWER AND THESE
AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
All prior and contemporaneous agreements, arrangements and
understandings between the parties to this Agreement as to the subject matter of
this Agreement, are, except as otherwise expressly provided in this Agreement,
rescinded.
DATED: March 31, 2000.
BORROWER
EVANS & SUTHERLAND COMPUTER CORPORATION,
a Utah corporation
By: /S/ R. GAYNOR
Richard J. Gaynor
Vice President and Chief Financial Officer
25
LENDER
ZIONS FIRST NATIONAL BANK,
a national banking association
By: /S/ M. BROUGH
Michael R. Brough
Vice President
26
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this day of May,
2000, by Richard J. Gaynor, Vice President and Chief Financial Officer of Evans
& Sutherland Computer Corporation, a Utah corporation.
NOTARY PUBLIC
My Commission Expires: Residing At:
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day of
May, 2000, by Michael R. Brough, Vice President of Zions First National Bank, a
national banking association.
NOTARY PUBLIC
My Commission Expires: Residing At:
27
EXHIBIT A
REAL PROPERTY DESCRIPTION
The real property located in Salt Lake County, State of Utah, and more
particularly described as follows:
[SEE ATTACHED EXHIBIT A]
28