[LETTRHEAD OF COMERICA]
MASTER REVOLVING NOTE
Variable Rate-Demand Obligatory Advances (Business and Commercial Loans Only)
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AMOUNT NOTE DATE MATURITY DATE TAX IDENTIFICATION #
$2,000,000.00 July 14, 1998 ON DEMAND 95-2782215
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For Value Received, the undersigned promise(s) to pay ON DEMAND to the order of
Comerica Bank-California ("Bank"), at any office of the Bank in the State of
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California, Two Million and no/100
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Dollars (U.S.) (or that portion of it advanced by the Bank and not repaid as
later provided) with interest until demand or an Event of Default, as later
defined, at a per annum rate equal to the Bank's base rate from time to time in
effect minus ** 0.250 % per annum [Initial Here -- /s/ TM ]and after that at a
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rate equal to the rate of interest otherwise prevailing under this Note plus 3%
per annum (but in no event in excess of the maximum rate permitted by law).
The Bank's "base rate" is that annual rate of interest so designated by the Bank
and which is changed by the Bank from time to time. Interest rate changes will
be effective for interest computation purposes as and when the Bank's base rate
changes. Interest shall be calculated on the basis of a 360-day year for the
actual number of days the principal is outstanding. Unless sooner demanded,
accrued interest on this Note shall be payable on the 14th day of each
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MONTH commencing August 14, 1998 . If the frequency
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of interest payments is not otherwise specified, accrued interest on this Note
shall be payable monthly on the first day of each month, unless sooner demanded.
If any payment of principal or interest under this Note shall be payable on a
day other than a day on which the Bank is open for business, this payment shall
be extended to the next succeeding business day and interest shall be payable
at the rate specified in this Note during this extension. A late payment charge
equal to 5% each late payment may be charged on any payment not received by the
Bank within 10 calendar days after the payment due date, but acceptance of
payment of this charge shall not waive any Default under this Note.
[INITIAL HERE /S/ TM ** SEE ADDENDUM ATTACHED FOR RATE OPTION]
The principal amount payable under this Note shall be the sum of all
advances made by the Bank to or at the request of the undersigned, less
principal payments actually received in cash by the Bank. The books and records
of the Bank shall be the best evidence of the principal amount and the unpaid
interest amount owing at any time under this Note and shall be conclusive absent
manifest error. No interest shall accrue under this Note until the date of the
first advance made by the Bank; after that interest on all advances shall accrue
and be computed on the principal balance outstanding from time to time under
this Note until the same is paid in full.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other security or
collateral agreement which has been, or will at any time(s) later be, executed
by any (or all) of the undersigned to or for the benefit of the Bank
(collectively "Collateral"). Notwithstanding the above, (i) to the extent that
any portion of the indebtedness is a consumer loan, that portion shall not be
secured by any deed of trust or mortgage on or other security interest in any of
the undersigned's principal dwelling or any of the undersigned's real property
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the undersigned
(or any of them) has(have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure this
Note or any other indebtedness of the undersigned (or any of them), unless
expressly provided to the contrary in another place.
If the undersigned (or any of them) or any guarantor under a guaranty of all
or part of the indebtedness ("guarantor") (i) fall(s) to pay any of the
indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay
any indebtedness owing on a demand basis upon demand; or (ii) fail(s) to comply
with any of the terms or provisions of any agreement between the undersigned (or
any of them) or any such guarantor and the Bank; or (iii) become(s) insolvent
or the subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, (if a business
entity) cease(s) doing business as a going concern, (if a natural person)
die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any general
partner of it dies, becomes incompetent or becomes the subject of a bankruptcy
proceeding or (if a corporation or a limited liability company) is the subject
of a dissolution, merger or consolidation; or (a) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the indebtedness shall be discovered to be untrue or
incomplete; or (b) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the indebtedness; or (c) if there is any failure
by any of the undersigned or any guarantor to pay when due any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such indebtedness; or (d) if the Bank deems itself insecure believing that the
prospect of payment of this Note or any of the indebtedness is impaired or shall
fear deterioration, removal or waste of any of the Collateral; or (e) if there
is filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon the undersigned (or any of them) or any guarantor or
any of the Collateral, including without limit, any accounts of the undersigned
(or any of them) or any guarantor with the Bank, then the Bank, upon the
occurrence of any of these events (each a "Default"), may at its option and
without prior notice to the undersigned (or any of them), declare any or all
of the indebtedness to be immediately due and payable (notwithstanding any
provisions contained in the evidence of it to the contrary), sell or liquidate
all or any portion of the Collateral, set off against the indebtedness any
amounts owing by the Bank to the undersigned (or any of them), charge interest
at the default rate provided in the document evidencing the relevant
indebtedness and exercise any one or more of the rights and remedies granted to
the Bank by any agreement with the undersigned (or any of them) or given to it
under applicable law. In addition, if this Note is secured by a deed of trust
or mortgage covering real property, then the trustor or mortgagor shall not
mortgage or pledge the mortgaged premises as security for any other indebtedness
or obligations. This Note, together with all other indebtedness secured by said
deed of trust or mortgage, shall become due and payable immediately, without
notice, at the option of the Bank, (a) if said trustor or mortgagor shall
mortgage or pledge the mortgaged premises for any other indebtedness or
obligations or shall convey, assign or transfer the mortgaged premises by deed,
installment sale contract or other instrument, or (b) if the title to the
mortgaged premises shall become vested in any other person or party in any
manner whatsoever, or (c) if there is any disposition (through one or more
transactions) or legal or beneficial title to a controlling interest of said
trustor or mortgagor.
The undersigned acknowledge(s) that this Note matures upon issuance, and that
the Bank, at any time, without notice, and without reason, may demand that this
Note be immediately paid in full. The demand nature of this Note shall not be
deemed modified by reference to a Default in this Note or in any agreement to a
default by the undersigned or to the occurrence of an event of default
(collectively an "Event of Default"). For purposes of this Note, to the extent
there is reference to an Event of Default this reference is for the purpose of
permitting the Bank to accelerate indebtedness not on a demand basis and to
receive interest at the default rate provided in the document evidencing the
relevant indebtedness. It is expressly agreed that the Bank may exercise its
demand rights under this Note whether or not an Event of Default has occurred.
The Bank, with or without reason and without notice, may from time to time make
demand or partial payments under this Note and these demands shall not preclude
the Bank from demanding at any time that this Note be immediately paid in full.
All payments under this note shall be in immediately available United States
funds, without setoff or counterclaim.
If this note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest; notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-605 of the California Uniform
Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations, or any interest, in any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make
other disclosures to the full extent allowable, the Bank may disclose all
documents and information which the Bank now or later has relating to the
undersigned or the Indebtedness. The undersigned agree(s) that the Bank may
provide information relating to the Note or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorney fees, whether inside or outside counsel is used, whether
or not suit is instituted and, if suit is instituted, whether at the trial court
level, appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or incurred
in any other matter or proceeding relating to this Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that
the writing constitutes an amendment, waiver or modification of the terms of
this Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
The maximum interest rate shall not exceed the highest applicable usury ceiling.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
THIS NOTE IS CROSS DEFAULTED TO ALL PRESENT AND FUTURE INDEBTEDNESS OF
BORROWER.
Provena Foods, Inc.
By: /s/ Illegible Signature Its: CEO
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SIGNATURE OF TITLE
By: /s/ Illegible Signaure Its: Chairman
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SIGNATURE OF TITLE
By: /s/ Illegible Signature Its: CFO
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SIGNATURE OF TITLE
By:
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SIGNATURE OF TITLE
5010 Eucalyptus Avenue Chino California USA 91710
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STREET ADDRESS CITY STATE COUNTRY ZIP CODE
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For Bank Use Only CCAR#
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Loan Officer Initials Loan Group Name Obligor(s) Name Provena Foods Inc.
MA San Jose Metro II
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Loan Officer I.D. No. Loan Group No. Obligor # Note # Amount
48132 95938 $2,000,000.00
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[Letterhead of Comerica]
Security Agreement
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As --- July 14, 1998, for value received, the undersigned ("Debtor") grants to
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Comerica Bank-California ("Bank"), a California banking corporation, a
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continuing security interest in the Collateral (as defined below) to secure
payment when due, whether by stated maturity, demand acceleration or otherwise,
of all existing and future indebtedness ("Indebtedness") to the Bank of Provena
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Foods Inc. ("Borrower") and/or Debtor. Indebtedness includes without limit any
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and all obligations or liabilities of the Borrower and/or Debtor to the Bank,
whether absolute or contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any and all
obligations or liabilities for which the Borrower and/or Debtor would otherwise
be liable to the Bank were it not for the invalidity or unenforceability of them
by reason of any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions of any of the
above; all costs incurred by Bank in establishing, determining, continuing, or
defending the validity or priority of its security interest, or in pursuing its
rights and remedies under this Agreement or under any other agreement between
Bank and Borrower and/or Debtor or in connection with any proceeding involving
Bank as a result of any financial accommodation to Borrower and/or Debtor; and
all other costs of collecting Indebtedness, including without limit attorney
fees. Debtor agrees to pay Bank all such costs incurred by the Bank, immediately
upon demand, and until paid all costs shall bear interest at the highest per
annum rate applicable to any of the Indebtedness, but not in excess of the
maximum rate permitted by law. Any reference in this Agreement to attorney fees
shall be deemed a reference to reasonable fees, costs, and expenses of both in-
house and outside counsel and paralegals, whether or not a suit or action is
instituted and to court costs if a suit or action is instituted, and whether
attorney fees or court costs are incurred at the trial court level, on appeal,
in a bankruptcy, administrative or probate proceeding or otherwise.
1. Collateral shall mean all of the following property Debtor now or later owns
or has an interest in, wherever located:
. all Accounts Receivable (for purposes of this Agreement, "Accounts
Receivable" consists of all accounts, general intangibles, chattel paper,
contract rights, deposit accounts, documents and instruments),
. all Inventory,
. all Equipment and Fixtures,
. specific items listed below and/or on attached Schedule A, if any, is/are
also included in Collateral:
. all goods, instruments, documents, policies and certificates of insurance,
deposits, money or other property (except real property which is not a
fixture) which are now or later in possession of Bank, or as to which Bank
now or later controls possession by documents or otherwise, and
. all additions, attachments, accessions, parts, replacements, substitutions,
renewals, interest, dividends, distributions, rights of any kind (including
but not limited to stock splits, stock rights, voting and preferential
rights), products, and proceeds of or pertaining to the above including,
without limit, cash or other property which were proceeds and are recovered
by a bankruptcy trustee or otherwise as a preferential transfer by Debtor.
Warranties, Covenants and Agreements. Debtor warrants, covenants and agrees as
follows:
2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may request,
any information Bank may reasonably request and allow Bank to examine,
inspect, and copy any of Debtor's books and records. Debtor shall, at the
request of Bank, mark its records and the Collateral to clearly indicate
the security interest of Bank under this Agreement.
2.2 At the time any Collateral becomes, or is represented to be, subject to a
security interest in favor of Bank, Debtor shall be deemed to have
warranted that (a) Debtor is the lawful owner of the Collateral and has the
right and authority to subject it to a security interest granted to Bank;
(b) none of the Collateral is subject to any security interest other than
that in favor of Bank and there are no financing statements on file, other
than in favor of Bank; and (c) Debtor acquired its rights in the Collateral
in the ordinary course of its business.
2.3 Debtor will keep the Collateral free at all times from all claims, liens,
security interests and encumbrances other than those in favor of Bank.
Debtor will not, without the prior written consent of Bank, sell, transfer
or lease, or permit to be sold, transferred or leased, any or all of the
Collateral, except (where Inventory is pledged as Collateral) for Inventory
in the ordinary course of its business and will not return any Inventory to
its supplier. Bank or its representatives may at all reasonable times
inspect the Collateral and may enter upon all premises where the Collateral
is kept or might be located.
2.4 Debtor will do all acts and will execute or cause to be executed all
writings requested by Bank to establish, maintain and continue a perfected
and first security interest of Bank in the Collateral. Debtor agrees that
Bank has no obligation to acquire or perfect any lien on or security
interest in any asset(s), whether realty or personalty, to secure payment
of the Indebtedness, and Debtor is not relying upon assets in which the
Bank may have a lien or security interest for payment of the Indebtedness.
2.5 Debtor will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any time are or
may become a lien, charge, or encumbrance upon any Collateral, except to
the extent contested in good faith and bonded in a manner satisfactory to
Bank. If Debtor fails to pay any of these taxes, assessments, or other
charges in the time provided above, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so expended by
Bank immediately upon demand, together with interest at the highest lawful
default rate which could be charged by Bank on any Indebtedness.
2.6 Debtor will keep the Collateral in good condition and will protect it from
loss, damage, or deterioration from any cause. Debtor has and will maintain
at all times (a) with respect to the Collateral, insurance under an "all
risk" policy against fire and other risks customarily insured against, and
(b) public liability insurance and other insurance as may be required by
law or reasonably required by Bank, all of which insurance shall be in
amount, form and content, and written by companies as may be satisfactory
to Bank, containing a lender's loss payable endorsement acceptable to Bank.
Debtor will deliver to Bank immediately upon demand evidence satisfactory
to Bank that the required insurance has been procured. If Debtor fails to
maintain satisfactory insurance, Bank has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so expended by
Bank immediately upon demand, together with interest at the highest lawful
default rate which could be charged by Bank on any Indebtedness.
2.7 If Accounts Receivable are pledged as Collateral under this Agreement, then
on each occasion on which Debtor evidences to Bank the account balances on
and the nature and extent of the Accounts Receivable, Debtor shall be
deemed to have warranted that except as otherwise indicated (a) each of
those Accounts Receivable is valid and enforceable without performance by
Debtor of any act; (b) each of those account balances are in fact owing,
(c) there are no setoffs, recoupments, credits, contra accounts,
counterclaims or defenses against any of those Accounts Receivable, (d) as
to any Accounts Receivable represented by a note, trade acceptance, draft
or other instrument or by any chattel paper or document, the same have been
endorsed and/or delivered by Debtor to Bank, (e) Debtor has not received
with respect to any Account Receivable, any notice of the death of the
related account debtor, nor of the dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a receiver for,
assignment for the benefit of creditors by, or filing of a petition in
bankruptcy by or against, the account debtor, and (f) as to each Account
Receivable, the account debtor is not an affiliate of Debtor, the United
States of America or any department, agency or instrumentality of it, or a
citizen or resident of any jurisdiction outside of the United States.
Debtor will do all acts and will execute all writings
requested by Bank to perform, enforce performance of, and collect all
Accounts Receivable. Debtor shall neither make nor permit any
modification, compromise or substitution for any Account Receivable
without the prior written consent of the Bank. Debtor shall, at Bank's
request, arrange for verification of Accounts Receivable directly with
account debtors or by other methods acceptable to Bank.
2.8 Debtor at all times shall be in strict compliance with all applicable
laws, including without limit any laws, ordinances, directives,
orders, statutes, or regulations an object of which is to regulate or
improve health, safety, or the environment ("Environmental Laws").
2.9 If marketable securities are pledged as Collateral under this
Agreement and if at any time the outstanding principal balance of the
Indebtedness exceeds N/A of the value of the
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Collateral, as such value is determined from time to time by Bank
(herein called the "Margin Requirement"), Debtor shall immediately pay
or cause to be paid to Bank an amount sufficient to reduce the
Indebtedness such that the remaining principal outstanding thereunder
is equal to or less than the Margin Requirement. Bank shall apply
payments made under this paragraph in payment of the Indebtedness in
such order and manner of application as Bank in its sole discretion
elects. In the alternative, Debtor may provide or cause to be provided
to Bank additional collateral in the form of cash or other property
acceptable to Bank and with a value, as determined by Bank, that when
added to the Collateral will constitute compliance with the Margin
Requirement.
2.10 If Bank, acting in its sole discretion, redelivers Collateral to
Debtor or Debtor's designee for the purpose of (a) the ultimate sale
or exchange thereof; or (b) presentation, collection, renewal, or
registration of transfer thereof; or (c) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise
dealing with it preliminary to sale or exchange; such redelivery shall
be in trust for the benefit of Bank and shall not constitute a release
of Bank's security interest in it or in the proceeds or products of it
unless Bank specifically so agrees in writing. If Debtor requests any
such redelivery, Debtor will deliver with such request a duly executed
financing statement in form and substance satisfactory to the Bank.
Any proceeds of Collateral coming into Debtor's possession as a result
of any such redelivery shall be held in trust for Bank and immediately
delivered to Bank for application on the Indebtedness. Bank may (in
its sole discretion) deliver any or all of the Collateral to Debtor,
and such delivery by Bank shall discharge Bank from all liability or
responsibility for such Collateral. Bank, at its option, may require
delivery of any Collateral to Bank at any time with such endorsements
or assignments of the Collateral as Bank may request.
2.11 At any time without notice, Bank may, as to Collateral other than
Equipment, Fixtures or Inventory, (a) cause any or all of such
Collateral to be transferred to its name or to the name of its
nominees; (b) receive or collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums and all other
distributions at any time payable or receivable on account of such
Collateral, and hold the same as Collateral, or apply the same to the
Indebtedness, the manner and distribution of the application to be in
the sole discretion of Bank; (c) enter into any extension,
subordination, reorganization, deposit, merger or consolidation
agreement or any other agreement relating to or affecting such
Collateral, and deposit or surrender control of such Collateral, and
accept other property in exchange for such Collateral and hold or
apply the property or money so received pursuant to this Agreement.
2.12 Bank may assign any of the Indebtedness and deliver any or all of the
Collateral to its assignee, who then shall have with respect to
Collateral so delivered all the rights and powers of the Bank under
this Agreement, and after that Bank shall be fully discharged from all
liability and responsibility with respect to Collateral so delivered.
2.13 Debtor delivers this Agreement based solely on Debtor's independent
investigation of (or decision not to investigate) the financial
condition of Borrower and is not relying upon any information
furnished by Bank. Debtor assumes full responsibility for obtaining
any further information concerning the Borrower's financial condition,
the status of the Indebtedness or any other matter which the
undersigned may deem necessary or appropriate now or later. Debtor
waives any duty on the part of Bank, and agrees that Debtor is not
relying upon or expecting Bank to disclose to Debtor any fact now or
later known by Bank, whether relating to the operations or condition
of Borrower, the existence, liabilities or financial condition of any
guarantor of the Indebtedness, the occurrence of any default with
respect to the Indebtedness, or otherwise, not withstanding any effect
such fact may have upon Debtor's risk or Debtor's rights against
Borrower. Debtor knowingly accepts the full range of risk encompassed
in this Agreement, which risk includes without limit the possibility
that Borrower may incur Indebtedness to Bank after the financial
condition of Borrower, or Borrower's ability to pay debts as they
mature, has deteriorated.
2.14 Debtor shall defend, indemnify and hold harmless Bank, its employees,
agents, shareholders, affiliates, officers, and directors from and
against any and all claims, damages, fines, expenses, liabilities or
causes of action of whatever kind, including without limit consultant
fees, legal expenses, and attorney fees, suffered by any of them as a
direct or indirect result of any actual or asserted violation of any
law, including without limit, Environmental Laws, or of any
remediation relating to any property required by any law, including
without limit Environmental Laws.
3. Collection of Proceeds.
3.1 Debtor agrees to collect and enforce payment of all Collateral until
Bank shall direct Debtor to the contrary. Immediately upon notice to
Debtor by Bank and at all times after that, Debtor agrees to fully and
promptly cooperate and assist Bank in the collection and enforcement
of all Collateral and to hold in trust for Bank all payments received
in connection with Collateral and from the sale, lease or other
disposition of any Collateral, all rights by way of suretyship or
guaranty and all rights in the nature of a lien or security interest
which Debtor now or later has regarding Collateral. Immediately upon
and after such notice, Debtor agrees to (a) endorse to Bank and
immediately deliver to Bank all payments received on Collateral or
from the sale, lease or other disposition of any Collateral or arising
from any other rights or interests of Debtor in the Collateral, in the
form received by Debtor without commingling with any other funds, and
(b) immediately deliver to Bank all property in Debtor's possession or
later coming into Debtor's possession through enforcement of Debtor's
rights or interests in the Collateral. Debtor irrevocably authorizes
Bank or any Bank employee or agent to endorse the name of Debtor upon
any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce
these items to money. Bank shall have no duty as to the collection or
protection of Collateral or the proceeds of it, nor as to the
preservation of any related rights, beyond the use of reasonable care
in the custody and preservation of Collateral in the possession of
Bank. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this
Section 3.1 shall be deemed a consent by Bank to any sale, lease or
other disposition of any Collateral.
3.2 If Accounts Receivable are pledged as Collateral, this Section 3.2
shall be applicable and Debtor agrees that immediately upon Bank's
request (whether or not any Event of Default exists) the indebtedness
shall be on a "remittance basis" as follows: Debtor shall at its sole
expense establish and maintain (and Bank, at Bank's option, may
establish and maintain at Debtor's expense): (a) an United States Post
Office lock box (the "Lock Box"), to which Bank shall have exclusive
access and control. Debtor expressly authorizes Bank, from time to
time, to remove contents from the Lock Box, for disposition in
accordance with this Agreement. Debtor agrees to notify all account
debtors and other parties obligated to Debtor that all payments made
to Debtor (other than payments by electronic funds transfer) shall be
remitted, for the credit of Debtor, to the Lock Box, and Debtor shall
include a like statement on all invoices; and (b) a non-interest
bearing deposit account with Bank which shall be titled as designated
by Bank (the "Cash Collateral Account") to which Bank shall have
exclusive access and control. Debtor agrees to notify all account
debtors and other parties obligated to Debtor that all payments made
to Debtor by electronic funds transfer shall be remitted to the Cash
Collateral Account, and Debtor, at Bank's request, shall include a
like statement on all invoices. Debtor shall execute all documents and
authorizations as required by Bank to establish and maintain the Lock
Box and the Cash Collateral Account.
3.3 If Accounts Receivable are pledged as Collateral, this Section 3.3
shall be applicable, and all items or amounts which are remitted to
the Lock Box, to the Cash Collateral Account, or otherwise delivered
by or for the benefit of Debtor to Bank on account of partial or full
payment of, or with respect to, any Collateral shall, at Bank's
option, (i) be applied to the payment of the Indebtedness, whether
then due or not, in such order or at such time
of application as Bank may determine in its sole discretion, or, (ii)
be deposited to the Cash Collateral Account. Debtor agrees that Bank
shall not be liable for any loss or damage which Debtor may suffer as
a result of Bank's processing of items or its exercise of any other
rights or remedies under this Agreement, including without limitation
indirect, special or consequential damages, loss of revenues or
profits, or any claim, demand or action by any third party arising
out of or in connection with the processing of items or the exercise
of any other rights or remedies under this Agreement. Debtor agrees
to indemnify and hold Bank harmless from and against all such third
party claims, demands or actions, and all related expenses or
liabilities, including, without limitation, attorney fees.
4. Defaults, Enforcement and Application of Proceeds
4.1 Upon the occurrence of any of the following events (each an "Event of
Default"), Debtor shall be in default under this agreement:
(a) Any failure to pay the Indebtedness or any other indebtedness
when due, or such portion of it as may be due, by acceleration
or otherwise; or
(b) Any failure or neglect to comply with, or breach of or default
under, any term of this Agreement, or any other agreement or
commitment between Borrower, Debtor, or any guarantor of any
of the Indebtedness ("Guarantor") and Bank; or
(c) Any warranty, representation, financial statement, or other
information made, given or furnished to Bank by or on behalf of
Borrower, Debtor, or any Guarantor shall be, or shall prove to
have been, false or materially misleading when made, given, or
furnished; or
(d) Any loss, theft, substantial damage or destruction to or of any
Collateral, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection
with any Collateral or of any other judicial process of, upon or
in respect of Borrower, Debtor, any Guarantor, or any
Collateral; or
(e) Sale or other disposition by Borrower, Debtor, or any Guarantor
of any substantial portion of its assets or property or
voluntary suspension of the transaction of business by Borrower,
Debtor, or any Guarantor, or death, dissolution, termination of
existence, merger, consolidation, insolvency, business failure,
or assignment for the benefit of creditors of or by Borrower,
Debtor, or any Guarantor; or commencement of any proceedings
under any state or federal bankruptcy or insolvency laws or laws
for the relief of debtors by or against Borrower, Debtor, or any
Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of
the property of Borrower, Debtor, or any Guarantor; or
(f) Bank deems the margin of Collateral insufficient or itself
insecure, in good faith believing that the prospect of payment
of the Indebtedness or performance of this Agreement is impaired
or shall fear deterioration, removal, or waste of Collateral.
4.2 Upon the occurrence of any Event of Default, Bank may at its
discretion and without prior notice to Debtor declare any or all of
the Indebtedness to be immediately due and payable, and shall have
and may exercise any one or more of the following rights and
remedies:
(a) Exercise all the rights and remedies upon default, in
foreclosure and otherwise, available to secured parties under
the provisions of the Uniform Commercial Code and other
applicable law;
(b) Institute legal proceedings to foreclose upon the lien and
security interest granted by this Agreement, to recover judgment
for all amounts then due and owing as Indebtedness, and to
collect the same out of any Collateral or the proceeds of any
sale of it;
(c) Institute legal proceedings for the sale, under the judgment or
decree of any court of competent jurisdiction, of any or all
Collateral; and/or
(d) Personally or by agents, attorneys, or appointment of a
receiver, enter upon any premises where Collateral may then be
located, and take possession of all or any of it and/or render
it unusable; and without being responsible for loss or damage
to such Collateral, hold, operate, sell, lease, or dispose of
all or any Collateral at one or more public or private sales,
leasings or other dispositions, at places and times and on
terms and conditions as Bank may deem fit, without any previous
demand or advertisement; and except as provided in this
Agreement, all notice of sale, lease or other disposition, and
advertisement, and other notice or demand, any right or equity
of redemption, and any obligation of a prospective purchaser or
lessee to inquire as to the power and authority of Bank to sell,
lease, or otherwise dispose of the Collateral or as to the
application by Bank of the proceeds of sale or otherwise, which
would otherwise be required by, or available to Debtor under,
applicable law are expressly waived by Debtor to the fullest
extent permitted.
At any sale pursuant to this Section 4.2, whether under the
power of sale, by virtue of judicial proceedings or otherwise,
it shall not be necessary for Bank or a public officer under
order of a court to have present physical or constructive
possession of Collateral to be sold. The recitals contained in
any conveyances and receipts made and given by Bank or the
public officer to any purchaser at any sale made pursuant to
this Agreement shall, to the extent permitted by applicable law,
conclusively establish the truth and accuracy of the matters
stated (including, without limit, as to the amounts of the
principal of and interest on the indebtedness, the accrual and
nonpayment of it and advertisement and conduct of the sale); and
all prerequisites to the sale shall be presumed to have been
satisfied and performed. Upon any sale of any Collateral, the
receipt of the officer making the sale under judicial
proceedings or of Bank shall be sufficient discharge to the
purchaser for the purchase money, and the purchaser shall not be
obligated to see to the application of the money. Any sale of
any Collateral under this Agreement shall be a perpetual bar
against Debtor with respect to that Collateral.
4.3 Debtor shall at the request of Bank, notify the account debtors or
obligors of Bank's security interest in the Collateral and direct
payment of it to Bank. Bank may, itself, upon the occurrence of any
Event of Default so notify and direct any account debtor or obligor.
4.4 The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank first upon all expenses
authorized by the Uniform Commercial Code and all reasonable attorney
fees and legal expenses incurred by Bank; the balance of the proceeds
of the sale or other disposition shall be applied in the payment of
the Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be paid over to
Debtor or to such other persons(s) as may be entitled to it under
applicable law. Debtor shall remain liable for any deficiency, which
it shall pay to Bank immediately upon demand.
4.5 Nothing in this Agreement is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy provided by law for the
collection of the Indebtedness or for the recovery of any other sum
to which Bank may be entitled for the breach of this Agreement by
Debtor. Nothing in this Agreement shall reduce or release in any way
any rights or security interests of Bank contained in any existing
agreement between Borrower, Debtor, or any Guarantor and Bank.
4.6 No waiver of default or consent to any act by Debtor shall be
effective unless in writing and signed by an authorized officer of
Bank. No waiver of any default or forbearance on the part of Bank in
enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future
occasion or of any rights.
4.7 Debtor irrevocably appoints Bank or any agent of Bank (which
appointment is coupled with an interest) the true and lawful attorney
of Debtor (with full power of substitution) in the name, place and
stead of, and at the expense of, Debtor:
(a) to demand, receive, sue for, and give receipts or acquittances
for any moneys due or to become due on any Collateral and to
endorse any item representing any payment on or proceeds of the
Collateral;
(b) to execute and file in the name of and on behalf of Debtor all
financing statements or other filings deemed necessary or
desirable by Bank to evidence, perfect, or continue the security
interests granted in this Agreement; and
(c) to do and perform any act on behalf of Debtor permitted or
required under this Agreement.
4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon
request of Bank, to assemble the Collateral and make it available to
Bank at any place designated by Bank which is reasonably convenient to
Bank and Debtor.
5. Miscellaneous.
5.1 Until Bank is advised in writing by Debtor to the contrary, all
notices, requests and demands required under this Agreement or by law
shall be given to, or made upon, Debtor at the first address indicated
in Section 5.15 below.
5.2 Debtor will give Bank not less than 90 days prior written notice of
all contemplated changes in Debtor's name, chief executive office
location, and/or location of any Collateral, but the giving of this
notice shall not cure any Event of Default caused by this change.
5.3 Bank assumes no duty of performance or other responsibility under any
contracts contained within the Collateral.
5.4 Bank has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and
any related obligations, including without limit this Agreement. In
connection with the above, but without limiting its ability to make
other disclosures to the full extent allowable, Bank may disclose all
documents and information which Bank now or later has relating to
Debtor, the Indebtedness or this Agreement, however obtained. Debtor
further agrees that Bank may provide information relating to this
Agreement or relating to Debtor to the Bank's parent, affiliates,
subsidiaries, and service providers.
5.5 In addition to Bank's other rights, any indebtedness owing from Bank
to Debtor can be set off and applied by Bank on any Indebtedness
at any time(s) either before or after maturity or demand without
notice to anyone.
5.6 Debtor waives any right to require the Bank to: (a) proceed against
person or property; (b) give notice of the terms, time and place of
any public or private sale of personal property security held from
Borrower or any other person, or otherwise comply with the provisions
of Section 9-504 of the Uniform Commercial Code; or (c) pursue any
other remedy in the Bank's power. Debtor waives notice of acceptance
of this Agreement and presentment, demand, protest, notice of protest,
dishonor, notice of dishonor, notice of default, notice of intent to
accelerate or demand payment of any Indebtedness, any and all other
notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Indebtedness, and agree(s) that the Bank
may, once or any number of times, modify the terms of any
Indebtedness, compromise, extend, increase, accelerate, renew or
forbear to enforce payment of any or all Indebtedness, or permit
Borrower to incur additional Indebtedness, all without notice to
Debtor and without affecting in any manner the unconditional
obligation of Debtor under this Agreement. Debtor unconditionally and
irrevocably waives each and every defense and setoff of any nature
which, under principles of guaranty or otherwise, would operate to
impair or diminish in any way the obligation of Debtor under this
Agreement, and acknowledges that such waiver is by this reference
incorporated into each security agreement, collateral assignment,
pledge and/or document from Debtor now or later securing the
Indebtedness, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.
5.7 Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from Borrower any amounts
paid or the value of any Collateral given by Debtor pursuant to this
Agreement.
5.8 In the event that applicable law shall obligate Bank to give prior
notice to Debtor of any action to be taken under this Agreement,
Debtor agrees that a written notice given to Debtor at least five
days before the date of the act shall be reasonable notice of the act
and, specifically, reasonable notification of the time and place
of any public sale or of the time after which any private sale, lease,
or other disposition is to be made, unless a shorter notice period is
reasonable under the circumstances. A notice shall be deemed to be
given under this Agreement when delivered to Debtor or when placed in
an envelope addressed to Debtor and deposited, with postage prepaid,
in a post office or official depository under the exclusive care and
custody of the United States Postal Service or delivered to an
overnight courier, certified, or first class mail.
5.9 Notwithstanding any prior revocation, termination, surrender, or
discharge of this Agreement in whole or in part, the effectiveness of
this Agreement shall automatically continue or be reinstated in the
event that any payment received or credit given by Bank in respect of
the Indebtedness is returned, disgorged, or rescinded under any
applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable
against Debtor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by Bank, and whether or not
Bank relied upon this payment or credit or changed its position as
a consequence of it. In the event of continuation or reinstatement of
this Agreement, Debtor agrees upon demand by Bank to execute and
deliver to Bank those documents which Bank determines are appropriate
to further evidence (in the public records or otherwise) this
continuation or reinstatement, although the failure of Debtor to do
so shall not affect in any way the reinstatement or continuation.
5.10 This Agreement and all the rights and remedies of Bank under this
Agreement shall inure to the benefit of Bank's successors and assigns
and to any other holder who derives from Bank title to or an interest
in the Indebtedness or any portion of it, and shall bind Debtor and
the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Bank to any
assignment by Debtor.
5.11 If there is more than one Debtor, all undertakings, warranties and
covenants made by Debtor and all rights, powers and authorities
given to or conferred upon Bank are made or given jointly and
severally.
5.12 Except as otherwise provided in this Agreement, all terms in this
Agreement have the meanings assigned to them in Division 9 (or, absent
definition in Division 9, in any other Division) of the Uniform
Commercial Code, as of the date of this Agreement. "Uniform Commercial
Code" means the California Uniform Commercial Code, as amended.
5.13 No single or partial exercise, or delay in the exercise, of any right
or power under this Agreement, shall preclude other or further
exercise of the rights and powers under this Agreement. The
unenforceability of any provision of this Agreement shall not affect
the enforceability of the remainder of this Agreement. This Agreement
constitutes the entire agreement of Debtor and Bank with respect to
the subject matter of this Agreement. No amendment or modification of
this Agreement shall be effective unless the same shall be in writing
and signed by Debtor and an authorized officer of Bank. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of California, without regard to conflict of laws
----------
principles.
5.14 To the extent that any of the Indebtedness is payable upon demand,
nothing contained in this Agreement shall modify the terms and
conditions of that Indebtedness nor shall anything contained in this
Agreement prevent Bank from making demand, without notice and with or
without reason, for immediate payment of any or all of that
Indebtedness at any time(s), whether or not an Event of Default has
occurred.
5.15 Debtor's chief executive office is located and shall be maintained at
5010 Eucalyptus Avenue
---------------------------------------------
STREET ADDRESS
Chino Ca 91710
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CITY STATE ZIP CODE COUNTY
If Collateral is located at other than the chief executive office,
such Collateral is located and shall be maintained
at Crossroads Commerce Center
------------------------------------------------------------.
STREET ADDRESS
Lathrop California 95330 San Joaquin
------------------------------------------------------------------.
CITY STATE ZIP CODE COUNTY
Collateral shall be maintained only at the locations identified in
this Section 5.15.
5.16 A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement under the Uniform Commercial
Code and may be filed by Bank in any filing office.
5.17 This Agreement shall be terminated only by the filing of a
termination statement in accordance with the applicable provisions
of the Uniform Commercial Code, but the obligations contained in
Section 2.14 of this Agreement shall survive termination.
6. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE
INDEBTEDNESS.
7. Special Provisions Applicable to this Agreement. (*None, if left blank)
DEBTOR: Provena Foods, Inc.
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DEBTOR NAME TYPED/PRINTED
By: /s/ Illegible Signature
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SIGNATURE OF
Its: CEO
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TITLE (if applicable)
By: /s/ Illegible Signature
----------------------------------------
SIGNATURE OF
Its: Chairman
----------------------------------------
TITLE (if applicable)
By: /s/ Illegible Signature
----------------------------------------
SIGNATURE OF
Its: CFO
----------------------------------------
TITLE (if applicable)
By:
----------------------------------------
SIGNATURE OF
Its:
----------------------------------------
TITLE (if applicable)