WELLS FARGO BANK REVOLVING LINE OF CREDIT NOTE
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$3,000,000.00 Oakland, California
November 30, 1997
FOR VALUE RECEIVED, the undersigned CHOLESTECH CORPORATION ("Borrower")
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at East Bay RCBO, One Kaiser Plaza Suite 850, Oakland, CA 94612,
or at such other place as the holder hereof may designate, in lawful money of
the United States of America and in immediately available funds, the principal
sum of $3,000,000.00, or so much thereof as may be advanced and be outstanding,
with interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum equal to the Prime Rate in effect from time to time. The "Prime
Rate" is a base rate that Bank from time to time establishes and which serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto. Each change in the rate of interest hereunder shall
become effective on the date each Prime Rate change is announced within Bank.
(b) Payment of Interest. Interest accrued on this Note shall be payable on
the last day of each month, commencing December 31, 1997.
(c) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.
(d) Collection of Payments. Borrower authorizes Bank to collect all
interest and fees due hereunder by charging Borrower's demand deposit account
number 4187-516166 with Bank, or any other demand deposit account maintained by
any Borrower with Bank, for the full amount thereof. Should there be
insufficient funds in any such demand deposit account to pay all such sums when
due, the full amount of such deficiency shall be immediately due and payable by
Borrower.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the term
of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for any
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on November 30, 1998.
(b) Advances. Advances hereunder, to the total amount of the principal surm
available hereunder, may be made by the holder at the oral or written request of
(i) WARREN PINCKERT and/or ANDREA TILLER and/or CEClLIA AGUILAR, any two acting
together who are authorized to request advances and direct the disposition of
any avances until written notice of the revocation of such authority is received
by the holder at the office designated above, or (ii) any person, with respect
to advances deposited to the credit of any account of any Borrower with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have authority
to draw against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by any
Borrower.
(c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of Default"
under this Note:
(a) The failure to pay any principal, interest, fees or other charges when
due hereunder or under any contract, instrument or document executed in
connection with this Note.
(b) The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.
(c) The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.
(e) Any financial statement provided by any Borrower or Third Party Obligor
to Bank proves to be incorrect, false or misleading in any material respect.
(f) Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.
(g) Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to the holder under
this Note, and the prosecution or defense of any action in any way related to
this Note, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) Goveminq Law. This Note shall be governed by and construed in
accordance with the laws of the state of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
CHOLESTECH CORPORATION
By: /s/ Warren Pinckert
---------------------------
WARREN PINCKERT
PRESIDENT
November 30, 1997
Warren Pinckert, President
Cholestech Corporation
3347 Investment Blvd.
Hayward, CA. 94545
Dear Mr. Pinckert:
This letter is to confirm the changes agreed upon between Wells Fargo Bank,
National Association ("Bank") and Cholestech Corporation ("Borrower") to the
terms and conditions of that certain letter agreement between Bank and Borrower
dated as of November 19, 1996, as amended from time to time (the "Agreement").
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree that the Agreement shall be amended
as follows to reflect said changes.
1. The Agreement is hereby amended by deleting "November 30, 1997" as the
last day on which Bank will make advances under the Line of Credit, and by
substituting for said date "November 30, 1998," with such change to be effective
upon the execution and delivery to Bank of a promissory note substantially in
the form of Exhibit A attached hereto (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Agreement)
and all other contracts, instruments and documents required by Bank to evidence
such change.
2. Except as specifically provided herein, all terms and conditions of the
Agreement remain in full force and effect, without waiver or modification. All
terms defined in the Agreement shall have the same meaning when used herein.
This letter and the Agreement shall be read together, as one document.
3. Borrower hereby remakes all representations and warranties contained in
the Agreement and reaffirms all covenants set forth therein. Borrower further
certifies that as of the date of Borrower's acknowledgment set forth below there
exists no default or defined event of default under the Agreement or any
promissory note or other contract, instrument or document executed in connection
therewith, nor any condition, act or event
Cholestech Corporation
November 30, 1997
Page 2
which with the giving of notice or the passage of time or both would constitute
such a default or defined event of default.
Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions.
Sincerely,
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Patricia L. Dorsey
------------------------
PATRICIA L. DORSEY
VICE PRESIDENT
Acknowledged and accepted as of December 1, 1997:
By: /s/ Warren Pinckert
----------------------
WARREN PINCKERT
PRESIDENT
SECURITIES ACCOUNT CONTROL AGREEMENT
WELLS FARGO BANK (Wells Fargo Bank Intermediary)
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THIS SECURITIES ACCOUNT CONTROL AGREEMENT (this "Agreement") is entered into as
of November 30, 1997, by and among CHOLESTECH CORPORATION ("Customer"), WELLS
FARGO BANK (TEXAS), NATIONAL ASSOCIATION, acting through its Investment Group
("Intermediary"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, acting through its
East Bay RCBO Office ("Secured Party").
RECITALS
A. Customer maintains that certain INVESTMENT MANAGEMENT Account No.
358210114 (the "Securities Account") with Intermediary pursuant to an agreement
between Intermediary and Customer dated as of December 2, 1996, and governed by
the laws of the State of California (the "Account Agreement"), and Customer has
granted to Secured Party a security interest in the Securities Account and all
financial assets and other property now or at any time hereafter held in the
Securities Account. Security interest limited to $3,000,000 plus interest.
B. Secured Party, Customer and Intermediary have agreed to enter into this
Agreement to perfect Secured Party's security interests in the Collateral, as
defined below.
NOW, THEREFORE, in consideration of their mutual covenants and promises, the
parties agree as follows:
1. DEFINITIONS. As used herein:
(a) the term "Collateral" shall mean: (i) the Securities Account; (ii) all
financial assets credited to the Securities Account; (iii) all security
entitlements with respect to the financial assets credited to the Securities
Account; (iv) any and all other investment property or assets maintained or
recorded in the Securities Account; and (v) all substitutions for, and proceeds
of the sale or other disposition of, any of the foregoing, including without
limitation, cash proceeds; and
(b) the terms "investment property," "entitlement order," "financial asset"
and "security entitlement" shall have the respective meanings set forth in the
California Uniform Commerical Code. The parties hereby expressly agree that all
property, including without limitation, cash, certificates of deposit and mutual
funds, at any time held in the Securities Account is to be treated as a
"financial asset".
2. AGREEMENT FOR CONTROL. Intermediary is authorized by Customer and agrees
to comply with all entitlement orders originated by Secured Party with respect
to the Securities Account, and all other requests or instructions from Secured
Party regarding disposition and/or delivery of the Collateral, without further
consent or direction from Customer or any other party.
3. CUSTOMER'S RIGHTS WITH RESPECT TO THE COLLATERAL.
(a) Until Intermediary is notified otherwise by Secured Party: (i)
Customer, or any party authorized by Customer to advise or otherwise act with
respect to the Securities Account, may give trading instructions to Intermediary
with respect to Collateral in the Securities Account; and (ii) Intermediary may
distribute to Customer or any other party in accordance with Customer's
directions that portion of the Collateral which consists of interest and/or cash
dividends earned on financial assets maintained in the Securities Account.
(b) Without Secured Party's prior written consent, except to the extent
permitted by Section 3(a) hereof: (i) neither Customer nor any party other than
Secured Party may withdraw any Collateral from the Securities Account; and (ii)
Intermediary will not comply with any entitlement order or request to withdraw
any Collateral from the Securities Account given by any party other than Secured
Party.
(c) Upon receipt of either written or oral notice from Secured Party: (i)
Intermediary shall promptly cease complying with entitlement orders and other
instructions concerning the Collateral, including the Securities Account, from
all parties other than Secured Party; and (ii) Intermediary shall not make any
further distributions of any Collateral to any party other than Secured Party,
nor permit any further voluntary changes in the financial assets.
4. INTERMEDIARY'S ACKNOWLEDGMENTS. Intermediary acknowledges that:
(a) The Securities Account is maintained with Intermediary solely in
Customer's name.
(b) Intermediary has no knowledge of any claim to, security interest in or
lien upon any of the Collateral, except: (i) the security interests in favor of
Secured Party; and (ii) Intermediary's liens securing fees and charges, or
payment for open trade commitments, as described in Section 4(c) hereof.
(c) Any claim to, security interest in or lien upon any of the Collateral
which Intermediary now has or at any time hereafter acquires shall be junior and
subordinate to the security interests of Secured Party in the Collateral, except
for Intermediary's liens securing: (i) fees and charges owed by Customer with
respect to the operation of the Securities Account; and (ii) payment owed to
Intermediary for open trade commitments for purchases in and for the Securities
Account.
5. AGREEMENTS OF INTERMEDIARY AND CUSTOMER. Intermediary and Customer agree
that:
(a) Intermediary shall flag its books, records and systems to reflect
Secured Party's security interests in the Collateral, and shall provide notice
thereof to any party making inquiry as to Customer's accounts with Intermediary
to whom Intermediary is legally required or permitted to provide information.
(b) Intermediary shall send copies of all statements relating to the
Securities Account simultaneously to Customer and Secured Party.
(c) Intermediary shall promptly notify Secured Party if any other party
asserts any claim to, security interest in or lien upon any of the Collateral,
and Intermediary shall not enter into any control, custodial or other similar
agreement with any other party that would create or acknowledge the existence of
any such other claim, security interest or lien.
(d) Without Secured Party's prior written consent, Intermediary and
Customer shall not amend, modify or terminate the Account Agreement, other than:
(i) amendments to reflect ordinary and reasonable changes in Intermediary's fees
and charges for handling the Securities Account; and (ii) operational changes
initiated by Intermediary as long as they do not alter any of Secured Party's
rights hereunder.
6. MISCELLANEOUS.
(a) This Agreement shall not create any obligation or duty of Intermediary
except as expressly set forth herein.
(b) In the event of any conflict between this Agreement and the Account
Agreement or any other agreement between Intermediary and Customer, the terms of
this Agreement shall control.
(c) All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing (unless otherwise specifically provided) and delivered to each party
at the address or facsimile number set forth below its signature, or to such
other address or facsimile number as any party may designate by written notice
to all other parties. Each such notice, request and demand shall be deemed given
or made as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by
facsimile, upon receipt; and (iii) if sent by mail, upon the earlier of the date
of receipt or 3 days after deposit in the U.S. mail, first class and postage
prepaid.
(d) This Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties. This Agreement may be amended or modified only in writing signed
by all parties hereto.
(e) This Agreement shall terminate upon Intermediary's receipt of written
notice from Secured Party expressly stating that Secured Party no longer claims
any security interest in the Collateral.
(f) This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
SEE PAGE 3 OF AGREEMENT FOR SIGNATURES
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
WELLS FARGO BANK (TEXAS), WELLS FARGO BANK,
NATIONAL ASSOCIATION, NATIONAL ASSOCIATION,
acting through its acting through its
Investment Group East Bay RCBO Office
By: By: /s/ Patricia L. Dorsey
---------------------------- ----------------------------
ROD OCMOND
ACCOUNT ADMINISTRATOR Title: Vice President
-------------------------
By:
----------------------------
JOHN VASCONCELLOS
VICE PRESIDENT
Address: 525 MARKET STREET, 10TH FL. Address: One Kaiser Plaza Suite 850
SAN FRANCISCO, CA 94105 Oakland, CA 94612
FAX No.: (415) 396-7179 FAX No.: (510) 839-2296
CHOLESTECH CORPORATION
By: /s/ Warren Pinckert
-----------------------
WARREN PINCKERT
PRESIDENT
Address: 3347 INVESTMENT BLVD.
HAYWARD, CA 94545-3808
FAX No.: (510) 732-7227
ADDENDUM TO SECURITY AGREEMENT: SECURITIES ACCOUNT
THIS ADDENDUM is attached to and made a part of that certain Security
Agreement: Securities Account executed by CHOLESTECH CORPORATION ("Debtor") in
favor of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"), dated as of November
30, 1997 (the "Agreement ").
The following provisions are hereby incorporated into the Agreement:
1. Securities Account Activity. So long as no Event of Default exists,
Debtor, or any party authorized by Debtor to act with respect to the Securities
Account, may (a) receive payments of interest and/or cash dividends earned on
financial assets maintained in the Securities Account, and (b) trade financial
assets maintained in the Securities Account. Without Bank's prior written
consent, except as permitted by the preceding sentence, neither Debtor nor any
party other than Bank may withdraw or receive any distribution of any Collateral
from the Securities Account. The Collateral Value of the Securities Account
shall at all times be equal to or greater than $3,000,000.00. In the event that
the Collateral Value of the Securities Account should, for any reason and at any
time, be less than the required amount, Debtor shall promptly make a principal
reduction on the Indebtedness, or deposit into the Securities Account additional
assets, of a nature satisfactory to Bank, in either case, sufficient such that
the Collateral Value of the Securities Account achieves the required amount.
2. "Collateral Value of the Securities Account" means the percentage set
forth below for each type of investment property held in the Securities Account
at the time of computation:
(a) 100% of the face amount of cash and cash equivalents;
(b) 90% of the market value of obligations of the United States of
America, but not to exceed the face amount;
(c) 90% of the market value of commercial paper rated at least A1 by
a nationally recognized rating agency, but not to exceed the face
amount;
(d) 85% of the market value of corporate and municipal bonds
(excluding convertible bonds) rated at least AA by a nationally
recognized rating agency, but not to exceed the face amount;
(e) 75% of the market value of corporate and municipal bonds
(excluding convertible bonds and those described in (d) above)
rated at least BBB by a nationally
recognized rating agency, but not to exceed the face amount;
with market value, in all instances, determined by Bank in its sole discretion,
and excluding from such computation all WF Securities and Common Trust Funds.
3. Exclusion from Collateral. Notwithstanding anything herein to the
contrary, the terms "Collateral" and "Proceeds" do not include, and Bank
disclaims a security interest in all WF Securities and Common Trust Funds now or
hereafter maintained in the Securities Account.
4. "Common Trust Funds" means common trust funds as described in 12 CFR
9.18 and includes, without limitation, common trust funds maintained by Bank for
the exclusive use of its fiduciary clients.
5. "WF Securities" means stock, securities or obligations of Wells Fargo &
Company or of any affiliate thereof (as the term affiliate is defined in Section
23A of the Federal Reserve Act (12 USC 371(c), as amended from time to time).
IN WITNESS WHEREOF, this Addendum has been executed as of the same date as
the Agreement.
CHOLESTECH CORPORATION WELLS FARGO BANK
NATIONAL ASSOCITATION
By: /s/ Warren Pinckert By: /s/ Patricia L. Dorsey
--------------------------- ----------------------------
Warren Pinckert Patricia L. Dorsey
President Vice President
-2-
SECURITY AGREEMENT
WELLS FARGO BANK SECURITIES ACCOUNT
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1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
CHOLESTECH CORPORATION, or any of them ("Debtor"), hereby grants and transfers
to WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest in (a)
Debtor's INVESTMENT MANAGEMENT Account No. 358210114 (the "Securities Account")
maintained with WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, acting through
its Investment Group ("Intermediary"), (b) all financial assets credited to the
Securities Account, (c) all security entitlements with respect to the financial
assets credited to the Securities Account, and (d) any and all other investment
property or assets maintained or recorded in the Securities Account (with all
the foregoing defined as "Collateral"), together with whatever is receivable or
received when any of the Collateral or proceeds thereof are sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including without limitation, (i) all rights to payment, including
returned premiums, with respect to any insurance relating to any of the
foregoing, (ii) all rights to payment with respect to any cause of action
affecting or relating to any of the foregoing, and (iii) all stock rights,
rights to subscribe, stock splits, liquidating dividends, cash dividends,
dividends paid in stock, new securities or other property of any kind which
Debtor is or may hereafter be entitled to receive on account of any securities
pledged hereunder, including without limitation, stock received by Debtor due to
stock splits or dividends paid in stock or sums paid upon or in respect of any
securities pledged hereunder upon the liquidation or dissolution of the issuer
thereof (hereinafter called "Proceeds"). Except as otherwise expressly permitted
herein, in the event Debtor receives any such Proceeds, Debtor will hold the
same in trust on behalf of and for the benefit of Bank and will immediately
deliver all such Proceeds to Bank in the exact form received, with the
endorsement of Debtor if necessary and/or appropriate undated stock powers duly
executed in blank, to be held by Bank as part of the Collateral, subject to all
terms hereof. As used herein, the terms "security entitlement," "financial
asset" and "investment property" shall have the respective meanings set forth in
the California Uniform Commercial Code. Security Interest limited 3,000,000
principal plus interest.
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.
4. OBLIGATIONS OF BANK. Bank shall have no duty to take any steps necessary
to preserve the rights of Debtor against prior parties, or to initiate any
action to protect against the possibility of a decline in the market value of
the Collateral or Proceeds. Bank shall not be obligated to take any action with
respect to the Collateral or Proceeds requested by Debtor unless such request is
made in writing and Bank determines, in its sole discretion, that the requested
action would not unreasonably jeopardize the value of the Collateral and
Proceeds as security for the Indebtedness.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank
that: (a) Debtor is the sole owner of the Collateral and Proceeds; (b) Debtor
has the right to grant a security interest in the Collateral and Proceeds; (c)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except the lien created hereby or as otherwise agreed to by Bank, or
heretofore disclosed by Debtor to Bank, in writing; (d) all statements contained
herein and, where applicable, in the Collateral, are true and complete in all
material respects; (e) no financing statement covering any of the Collateral or
Proceeds, and naming any secured party other than Bank, is on file in any public
office; (f) no person or entity, other than Debtor, Bank and Intermediary, has
any interest in or control over the Collateral; and (g) specifically with
respect to Collateral and Proceeds consisting of investment securities,
instruments, chattel paper, documents, contracts, insurance policies or any like
property, (i) all persons appearing to be obligated thereon have authority and
capacity to contract and are bound as they appear to be, and (ii) the same
comply with applicable laws concerning form, content and manner of preparation
and execution.
6. COVENANTS OF DEBTOR.
(a) Debtor Agrees in general: (i) to pay Indebtedness secured hereby when
due; (ii) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (iii) to pay all costs
and expenses, including reasonable attorneys' fees, incurred by Bank in the
perfection and preservation of the Collateral or Bank's interest therein and/or
the realization, enforcement and exercise of Bank's rights, powers and remedies
hereunder; (iv) to permit Bank to exercise its powers; (v) to execute and
deliver such documents as Bank deems necessary to create, perfect and continue
the security interests contemplated hereby; and (vi) not to change its chief
place of business (or personal residence, if applicable) or the places where
Debtor keeps any of the Collateral or Debtor's records concerning the Collateral
and Proceeds without first giving Bank written notice of the address to which
Debtor is moving same.
(b) Debtor agrees with regard to the Collateral and Proceeds, unless Bank
agrees otherwise in writing: (i) not to permit any security interest in or lien
on the Collateral or Proceeds, except in favor of Bank and except liens in favor
of Intermediary to the extent expressly permitted by Bank in writing; (ii) not
to hypothecate or permit the transfer by operation of law of any of the
Collateral or Proceeds or any interest therein; (iii) to keep, in accordance
with generally accepted accounting principles, complete and accurate records
regarding all Collateral and Proceeds, and to permit Bank to inspect the same
and make copies thereof at any reasonable time; (iv) if requested by Bank, to
receive and use reasonable diligence to collect Proceeds, in trust and as the
property of Bank, and to immediately endorse as appropriate and deliver such
Proceeds to Bank daily in the exact form in which they are received together
with a collection report in form satisfactory to Bank; (v) in the event Bank
elects to receive payments of Proceeds hereunder, to pay all expenses incurred
by Bank in connection therewith, including expenses of accounting,
correspondence, collection efforts, filing, recording, record keeping and
expenses incidental thereto; (vi) to provide any service and do any other acts
which may be necessary to keep all Collateral and Proceeds free and clear of all
defenses, rights of offset and counterclaims; and (vii) if the Collateral or
Proceeds consists of securities and so long as no Event of Default exists, to
vote said securities and to give consents, waivers and ratifications with
respect thereto, provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair Bank's interests in the
Collateral and Proceeds or be inconsistent with or violate any provisions of
this Agreement. Debtor further agrees that any party now or at any time
hereafter authorized by Debtor to advise or otherwise act with respect to the
Securities Account shall be subject to all terms and conditions contained herein
and in any control, custodial or other similar agreement at any time in effect
among Bank, Debtor and Intermediary relating to the Collateral.
7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank's officers and employees, or any of them, whether or not Debtor
is in default: (a) to perform any obligation of Debtor hereunder in Debtor's
name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Bank's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral or Proceeds; (d) to enter into any extension, reorganization,
deposit, merger or consolidation agreement, or any other agreement relating to
or affecting the Collateral or Proceeds, and in connection therewith to deposit
or surrender control of the Collateral and Proceeds, to accept other property in
exchange for the Collateral and Proceeds, and to do and perform such acts and
things as Bank may deem proper, with any money or property received in exchange
for the Collateral or Proceeds, at Bank's option, to be applied to the
Indebtedness or held by Bank under this Agreement; (e) to make any compromise or
settlement Bank deems desirable or proper in respect of the Collateral and
Proceeds; (f) to insure, process and preserve the Collateral and Proceeds; (g)
to exercise all rights, powers and remedies which Debtor would have, but for
this Agreement, with respect to all Collateral and Proceeds subject hereto; and
(h) to do all acts and things and execute all documents in the name of Debtor or
otherwise, deemed by Bank as necessary, proper and convenient in connection with
the preservation, perfection or enforcement of its rights hereunder. To effect
the purposes of this Agreement or otherwise upon instructions of Debtor, or any
of them, Bank may cause any Collateral and/or Proceeds to be transferred to
Bank's name or the name of Bank's nominee. If an Event of Default has occurred
and is continuing, any or all Collateral and/or Proceeds consisting of
securities may be registered, without notice, in the name of Bank or its
nominee, and thereafter Bank or its nominee may exercise, without notice, all
voting and corporate rights at any meeting of the shareholders of the issuer
thereof, any and all rights of conversion, exchange or subscription, or any
other rights, privileges or options pertaining to such Collateral and/or
Proceeds, all as if it were the absolute owner thereof. The foregoing shall
include, without limitation, the right of Bank or its nominee to exchange, at
its discretion, any and all Collateral and/or Proceeds upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, or upon the exercise by the issuer thereof or Bank of any right,
privilege or option pertaining to any shares of the Collateral and/or Proceeds,
and in connection therewith, the right to deposit and deliver any and all of the
Collateral and/or Proceeds with any committee, depository, transfer agent,
registrar or other designated agency upon such terms and conditions as Bank may
determine. All of the foregoing rights, privileges or options may be exercised
without liability on the part of Bank or its nominee except to account for
property actually received by Bank. Bank shall have no duty to exercise any of
the foregoing, or any other rights, privileges or options with respect to the
Collateral or Proceeds and shall not be responsible for any failure to do so or
delay in so doing.
8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor
agrees to pay, prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral and Proceeds, and upon the failure
of Debtor to do so, Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Bank shall be obligations of Debtor to Bank,
due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 15 hereof, and shall be
secured by the Collateral and Proceeds, subject to all terms and conditions of
this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i) any contract or instrument evidencing any Indebtedness, (ii) any other
agreement between any Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness, or (iii)
any control, custodial or other similar agreement in effect among Bank, Debtor
and Intermediary relating to the Collateral; (b) any representation or warranty
made by any Debtor herein shall prove to be incorrect, false or misleading in
any material respect when made; (c) any Debtor shall fail to observe or perform
any obligation or agreement contained herein; (d) any attachment or like levy on
any property of any Debtor; and (e) Bank, in good faith, believes any or all of
the Collateral and/or Proceeds to be in danger of misuse, dissipation,
commingling, loss, theft, damage or destruction, or otherwise in jeopardy or
unsatisfactory in character or value.
10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have
the right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the California Uniform Commerical
Code or otherwise provided by law, including without limitation, the right to
contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank. All rights, powers, privileges and remedies of Bank shall be cumulative.
No delay, failure or discontinuance of Bank in exercising any right, power,
privilege or remedy hereunder shall affect or operate as a waiver of such right,
power, privilege or remedy; nor shall any single or partial exercise of any such
right, power, privilege or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power, privilege
or remedy. Any waiver, permit, consent or approval of any kind by Bank of any
default hereunder, or any such waiver of any provisions or conditions hereof,
must be in writing and shall be effective only to the extent set forth in
writing. It is agreed that public or private sales, for cash or on credit, to a
wholesaler or retailer or investor, or user of property of the types subject to
this Agreement, or public auction, are all commercially reasonable since
differences in the sales prices generally realized in the different kinds of
sales are ordinarily offset by the differences in the costs and credit risks of
such sales. While an Event of Default exists: (a) Debtor will not dispose of any
of the Collateral or Proceeds except on terms approved by Bank; (b) Bank may
appropriate the Collateral and apply all Proceeds toward repayment of the
Indebtedness in such order of application as Bank may from time to time elect;
(c) Bank may take any action with respect to the Collateral contemplated by any
control, custodial or other similar agreement then in effect among Bank, Debtor
and Intermediary; and (d) at Bank's request, Debtor will assemble and deliver
all books and records pertaining to the Collateral or Proceeds to Bank at a
reasonably convenient place designated by Bank. For any Collateral or Proceeds
consisting of securities, Bank shall have no obligation to delay a sale of any
portion thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or Federal
law, even if the issuer thereof would agree to do so.
11. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or any
part of the Indebtedness, Bank may transfer all or any part of the Collateral or
Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred Bank shall retain all rights, powers,
privileges and remedies herein given. Any proceeds of any disposition of any of
the Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect.
12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in
full and all commitments by Bank to extend credit to Debtor have been
terminated, the power of sale and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.
13. MISCELLANEOUS. (a) The obligations of Debtor are joint and several; (b)
Debtor hereby waives any right (i) to require Bank to make any presentment or
demand, or give any notice of nonpayment or nonperformance, protest, notice of
protest or notice of dishonor hereunder, (ii) to direct the application of
payments or security for Indebtedness of Debtor or indebtedness of customers of
Debtor, or (iii) to require proceedings against others or to require exhaustion
of security; and (c) Debtor hereby consents to extensions, forbearances or
alterations of the terms of Indebtedness, the release or substitution of
security, and the release of any guarantors; provided however, that in each
instance, Bank believes in good faith that the action in question is
commercially reasonable in that it does not unreasonably increase the risk of
nonpayment of the Indebtedness to which the action applies. Until all
Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank.
14. NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in any
other loan documents entered into between Debtor and Bank and to Debtor at the
address of its chief executive office (or personal residence, if applicable)
specified below or to such other address as any party may designate by written
notice to each other party, and shall be deemed to have been given or made as
follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or 3 days after deposit in the U.S. mail,
first class and postage prepaid; and (c) if sent by telecopy, upon receipt.
15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in exercising any right, power, privilege or remedy conferred
by this Agreement or in the enforcement thereof, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Debtor or in any way
affecting any of the Collateral or Bank's ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or the Prime Rate in effect from time
to time. The "Prime Rate" is a base rate that Bank from time to time establishes
and which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto.
16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.
17. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this
Agreement as Debtor hereby expressly agrees that recourse may be had against his
or her separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.
18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Califomia
20. ADDENDUM. Additional terms and conditions relating to the Securities
Account are set forth in an Addendum attached hereto and incorporated herein by
this reference.
Debtor warrants that its chief executive office (or personal residence, if
applicable) is located at the following address: 3347 INVESTMENT BLVD., HAYWARD,
CA 94545
IN WITNESS WHEREOF, this Agreement has been duly executed as of November
30, 1997.
CHOLESTECH CORPORATION
By: /s/ Warren Pinckert
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WARREN PINCKERT
PRESIDENT