UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
------------------------------------
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27208
Simon Transportation Services Inc.
(Exact name of registrant as specified in its charter)
Nevada 87-0545608
(State or other jurisdiction of I.R.S. employer identification number)
incorporation or organization)
4646 South 500 West
Salt Lake City, Utah 84123
(801) 268-9100
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (July 1, 1996).
Class A Common Stock, $.01 par value: 2,869,807 shares
Class B Common Stock, $.01 par value: 1,872,161 shares
Exhibit Index is on Page 11.
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
<TABLE>
PAGE
NUMBER
<S> <C>
Item 1. Financial statements:
Condensed consolidated balance sheets as of June 30, 1996 and September 30, 1995
3
Condensed consolidated statements of income for the three months and the nine
months ended June 30, 1996 and 1995 4
Condensed consolidated statements of cash flows for the nine months ended June
30, 1996 and 1995 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial condition and results of
operations 7
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<S> <C> <C>
June 30, 1996 September 30, 1995
------------- ------------------
(Unaudited)
Current Assets:
Cash $ 3,541,955 $ 350,380
Receivables, net of allowance for doubtful accounts of $66,000
and $115,000, respectively 9,879,869 7,331,701
Other receivables 4,267,167 -
Operating supplies 436,230 639,915
Prepaid expenses and other 1,879,931 416,945
------------- ------------------
Total current assets 20,005,152 8,738,941
------------- ------------------
Property and Equipment, at cost:
Land 2,859,860 2,710,071
Revenue equipment 64,725,785 63,591,169
Buildings and improvements 6,216,249 4,796,379
Office furniture and equipment 2,586,308 2,116,518
------------- ------------------
76,388,202 73,214,137
Less accumulated depreciation and amortization (18,074,735) (21,014,556)
------------- ------------------
58,313,467 52,199,581
------------- ------------------
Other Assets 337,033 498,473
------------- ------------------
$ 78,655,652 $ 61,436,995
============= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 2,903,219 $ 8,577,770
Current portion of capitalized lease obligations 6,790,004 12,389,442
Accounts payable 2,076,358 1,369,252
Accrued liabilities 3,434,830 1,835,620
Accrued claims payable 1,543,307 1,296,575
------------- ------------------
Total current liabilities 16,747,718 25,468,659
------------- ------------------
Long-Term Debt, net of current portion 13,958,902 7,135,935
------------- ------------------
Capitalized Lease Obligations, net of current portion 16,792,867 19,799,823
------------- ------------------
Deferred Income Taxes 3,351,427 -
------------- ------------------
Stockholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued - -
Class A common stock, $.01 par value, 20,000,000 shares authorized,
2,869,807 and 427,839 shares issued, respectively 28,698 4,278
Class B common stock, $.01 par value, 5,000,000 shares authorized,
1,872,161 shares issued 18,722 18,722
Additional paid-in capital 25,276,203 735,292
Retained earnings 2,481,115 8,274,286
------------- ------------------
Total stockholders' equity 27,804,738 9,032,578
------------- ------------------
$ 78,655,652 $ 61,436,995
============= ==================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended June 30, Nine Months Ended June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
Operating Revenue $ 27,225,337 $ 19,288,247 $ 70,021,189 $ 55,678,582
------------ ------------ ------------ ------------
Operating Expenses:
Salaries, wages, and benefits 10,590,265 7,129,959 27,531,249 20,347,165
Fuel & fuel taxes 5,816,970 3,728,560 14,084,079 10,706,823
Operating supplies and expenses 3,359,073 2,864,529 9,908,650 8,355,979
Taxes and licenses 788,843 596,314 2,122,445 1,989,136
Insurance and claims 652,108 586,289 1,424,976 1,535,348
Communications and utilities 457,378 307,785 1,160,368 924,309
Depreciation and amortization 1,573,263 1,930,541 4,731,310 5,212,267
Rent 1,419,760 684,058 2,594,689 2,215,912
------------ ------------ ------------ ------------
Total operating expenses 24,657,660 17,828,035 63,557,766 51,286,939
------------ ------------ ------------ ------------
Operating income 2,567,677 1,460,212 6,463,423 4,391,643
Net interest expense (755,327) (914,761) (2,200,133) (2,670,553)
------------ ------------ ------------ ------------
Income before provision for income taxes 1,812,350 545,451 4,263,290 1,721,090
Provision for income taxes (Note 2) 717,691 - 4,606,807 -
------------ ------------ ------------ ------------
Net income (loss) $ 1,094,659 $ 545,451 $ (343,517) $ 1,721,090
============ ============ ============ ============
Pro Forma Information (Note 3):
Income before provision for income taxes $ 1,812,350 $ 545,451 $ 4,263,290 $ 1,721,090
Provision for income taxes 717,691 215,999 1,688,263 681,552
------------ ------------ ------------ ------------
Net income $ 1,094,659 $ 329,452 $ 2,575,027 $ 1,039,538
============ ============ ============ ============
Net income per common share $ 0.23 $ 0.14 $ 0.60 $ 0.45
============ ============ ============ ============
Weighted average common shares outstanding 4,741,968 2,300,000 4,308,583 2,300,000
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SIMON TRANSPORTATION SERVICES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
Nine Months Ended June 30,
1996 1995
------------ ------------
Cash Flows From Operating Activities:
Net income (loss) $ (343,517) $ 1,721,089
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization 4,731,310 5,212,266
Change in assets and liabilities:
(Increase) Decrease in receivables, net (2,548,168) 327,127
Decrease (Increase) in operating supplies 203,685 (110,787)
Increase in prepaid expenses and other (1,462,986) (506,264)
Decrease (Increase) in other assets 161,440 (162,832)
Increase (Decrease) in accounts payable 707,106 (233,600)
Increase (Decrease) in accrued liabilities 1,599,210 (623,216)
Increase in accrued claims payable 246,732 355,013
Increase in deferred income taxes 3,351,427 -
------------ ------------
Net cash provided by operating activities 6,646,239 5,978,796
------------ ------------
Cash Flows From Investing Activities:
Purchase of property and equipment (20,131,049) (5,853,005)
Proceeds from the sale of property and equipment 10,803,092 6,782,912
------------ ------------
Net cash (used in) provided by investing activities (9,327,958) 929,907
------------ ------------
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 17,469,979 2,914,916
Principal payments on long-term debt (12,041,822) (3,799,074)
Net (payments) borrowings under line-of-credit agreement (4,279,741) 1,802,511
Principal payments under capitalized lease obligations (14,390,799) (6,945,936)
Net proceeds from issuance of Class A common stock 19,720,737 -
Distributions to stockholders (605,060) (883,671)
------------ ------------
Net cash provided by (used in) financing activities 5,873,294 (6,911,254)
------------
Net Increase (Decrease) In Cash 3,191,575 (2,551)
Cash at Beginning of Period 350,380 52,817
------------ ------------
Cash at End of Period $ 3,541,955 $ 50,266
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 2,244,980 $ 2,530,293
Supplemental Schedule of Noncash Investing and
Financing Activities:
Equipment acquired through capitalized lease obligations 5,784,405 5,746,217
Receivables from sale of equipment 4,267,167 -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements include the
accounts of Simon Transportation Services Inc., a Nevada
holding company, and its wholly owned subsidiary, Dick Simon
Trucking, Inc. (together, the "Company"). All significant
intercompany balances and transactions have been eliminated in
consolidation.
The financial statements have been prepared, without audit, in
accordance with generally accepted accounting principals,
pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the
accompanying financial statements include all adjustments
which are necessary for a fair presentation of the results for
the interim periods presented, such adjustments being of a
normal recurring nature. Certain information and footnote
disclosures have been condensed or omitted pursuant to such
rules and regulations. The September 30, 1995 condensed
consolidated balance sheet was derived from the audited
balance sheet of the Company for the year then ended. It is
suggested that these condensed consolidated financial
statements and notes thereto be read in conjunction with the
consolidated financial statements and notes thereto included
in the prospectus of Simon Transportation Services Inc. dated
November 17, 1995. Results of operations in interim periods
are not necessarily indicative of results to be expected for a
full year.
Note 2. Income Taxes
The provision for income taxes for the nine months ended June
30, 1996 includes a one-time, non-cash charge for deferred
taxes totaling $2,980,115 relating to the Company's
termination of its S corporation election on November 17,
1995.
Note 3. Pro Forma Net Income Per Common Share
Pro forma net income per common share is determined by
dividing net income (loss) by the weighted average number of
common shares (considering common stock equivalents)
outstanding during the periods. Net income (loss) for the
three-month and the nine-month periods ended June 30, 1996 and
1995 has been adjusted to reflect the results of operations as
if the Company had been a C corporation and therefore subject
to income taxes in each period, and, for the nine months ended
June 30, 1996, to eliminate the effect of the $3.0 million
one-time, non-cash charge discussed in Note 2. The weighted
average shares for the three-month and the nine-month periods
ended June 30, 1995 also were adjusted to reflect the share
issuances, stock split, and contribution of outstanding shares
effected between April and September 1995 in preparation for
the Company's initial public offering as if they had occurred
on October 1, 1994.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's fiscal year ends on September 30 of each year. Thus, the
fiscal quarters discussed in this report represent the Company's third fiscal
quarters of its 1996 and 1995 fiscal years, respectively. The Company completed
its initial public offering of approximately 2.4 million shares of Class A
Common Stock during November 1995.
The Company operated as an S corporation prior to November 17, 1995. As
a result, the Company's net taxable earnings prior to that date were taxed
directly to the Company's then-existing stockholders rather than to the Company.
The pro forma statement of operations data included in the financial statements
contained herein set forth the Company's net income (loss) for the periods
presented as if the Company had been subject to federal and state income taxes
at a combined rate of 39.6% for all periods. The termination of the Company's S
corporation status contemporaneously with its initial public offering resulted
in a one-time, non-cash charge of approximately $3.0 million in recognition of
deferred income taxes, and the Company distributed approximately $605,000 in S
corporation earnings to its existing shareholders prior to the offering.
Results of Operations
Three months ended June 30, 1996 and 1995
Operating revenue increased 40.9% to $27.2 million for the three months
ended June 30, 1996, from $19.3 million for the corresponding period of 1995.
The increase in operating revenue was primarily attributable to a 37.1% increase
in weighted average tractors, to 832 in the 1996 period from 607 in the 1995
period, and a 5.3% increase in average revenue per tractor per week, to $2,530
in the 1996 period from $2,402 in the 1995 period. These increases were
partially offset by an increase in empty miles percentage to 11.4% from 11.3%.
Salaries, wages, and benefits increased to 38.9% of revenue for the
three months ended June 30, 1996, from 37.0% for the corresponding period of
1995. The change was attributable to an increase in driver base pay and the
improvement of health insurance coverage to attract and retain qualified drivers
and other personnel, as well as increases in the number of active participants
in the ss.401(k) plan and in administrative personnel. The additional cost of
these items was partially offset by reduced workers' compensation premiums.
Fuel and fuel taxes increased to 21.4% of revenue for the three months
ended June 30, 1996, from 19.3% for the corresponding period of 1995,
principally as a result of a substantial increase in average fuel prices during
the 1996 period. Fuel surcharges implemented with a substantial number of
customers during the 1996 period helped offset a portion of the increased fuel
costs and are expected to offset a portion of such costs in future periods, if
fuel prices remain at elevated levels.
Operating supplies and expenses decreased to 12.3% of revenue for the
three months ended June 30, 1996, from 14.9% for the corresponding period of
1995, primarily as a result of lower parts and tire replacement costs, outside
repairs, and maintenance expense associated with a decrease in the average age
of the Company's tractor fleet. These savings were partially offset by retaining
certain older tractors that had been scheduled for trade or sale in order to
meet customer demand for more equipment. The Company is currently upgrading its
fleet. Following the upgrade, all tractors will be covered by three-year,
500,000-mile warranties.
Taxes and licenses decreased to 2.9% of revenue for the three months
ended June 30, 1996, from 3.1% for the corresponding period of 1995, primarily
as a result of greater efficiency in licensing new tractors being added to the
fleet.
Insurance and claims decreased to 2.4% of revenue for the three months
ended June 30, 1996, from 3.0% for the corresponding period of 1995 because of
reduced insurance premiums and claims expense.
Communications and utilities increased to 1.7% of revenue for the three
months ended June 30, 1996, from 1.6% for the corresponding period of 1995
primarily as a result of increased use of the Company's satellite-based
communication system.
Depreciation and amortization (adjusted for the net gain on the sale of
property and equipment) decreased to 5.8% of revenue for the three months ended
June 30, 1996, from 10.0% for the corresponding period of 1995. The decrease was
primarily attributable to the use of operating leases rather than capital leases
to acquire new equipment during the period, and a $714,316 net gain on the sale
of property and revenue equipment during the 1996 period. No such gain was
recorded in the comparable quarter of 1995.
Rent increased to 5.2% of revenue for the three months ended June 30,
1996, from 3.5% for the corresponding period of 1995 as the Company replaced
equipment that had been financed under capital lease arrangements with equipment
financed under operating leases. The Company has utilized operating leases in
the most recent quarter because of more favorable terms. If the Company
continues to use operating lease financing, its operating ratio may be affected
in future periods because the implied financing costs of such equipment are
included as operating expenses instead of interest expense.
As a result of the foregoing, the Company's operating ratio decreased
to 90.6% for the three months ended June 30, 1996, from 92.4% for the
corresponding period of 1995.
Net interest expense decreased to 2.8% of revenue for the three months
ended June 30, 1996, from 4.7% for the corresponding period in 1995 as a result
of lower average debt and capitalized lease balances and a decrease in the
Company's average interest rate in the 1996 period compared with the 1995
period.
As a result of the factors described above, net income increased to
$1,094,659 for the three months ended June 30, 1996, compared with pro forma net
income of $329,452 for the corresponding period of 1995.
Nine months ended June 30, 1996 and 1995
Operating revenue increased 25.7% to $70.0 million for the nine months
ended June 30, 1996, from $55.7 million for the corresponding period of 1995.
The increase in operating revenue was primarily attributable to a 22.6% increase
in weighted average tractors, to 726 in the 1996 period from 592 in the 1995
period, and a 4.1% increase in average revenue per tractor per week, to $2,487
in the 1996 period from $2,390 in the 1995 period. These increases were
partially offset by an increase in empty miles percentage to 11.8% from 11.0%.
Salaries, wages, and benefits increased to 39.3% of revenue for the
nine months ended June 30, 1996, from 36.5% from the corresponding period of
1995. The change was attributable to an increase in driver base pay and the
improvement of health insurance coverage to attract and retain qualified drivers
and other personnel, as well as increases in the number of active participants
in the ss.401(k) plan and in administrative personnel. The additional cost of
these items was partially offset by reduced workers' compensation premiums.
Fuel and fuel taxes increased to 20.1% of revenue for the nine months
ended June 30, 1996, from 19.2% for the corresponding period of 1995, primarily
as a result of higher average fuel prices during the 1996 period.
Operating supplies and expenses decreased to 14.2% of revenue for the
nine months ended June 30, 1996, from 15.0% for the corresponding period of
1995, primarily as a result of lower parts and tire replacement costs, outside
repairs, and maintenance expense associated with a decrease in the average age
of the Company's tractor fleet. These savings were partially offset by retaining
certain older tractors that had been scheduled for trade or sale in order to
meet customer demand for more equipment. Most of the tractors in the Company's
fleet are scheduled for replacement during 1996.
Taxes and licenses decreased to 3.0% of revenue for the nine months
ended June 30, 1996, from 3.6% for the corresponding period of 1995, primarily
as a result of greater efficiency in licensing new tractors being added to the
fleet.
Insurance and claims decreased to 2.0% of revenue for the nine months
ended June 30, 1996, from 2.8% for the corresponding period of 1995 because of
reduced insurance premiums and claims expense.
Communications and utilities were 1.7% of revenue in each period.
Depreciation and amortization (adjusted for the net gain on the sale of
property and equipment) decreased to 6.8% of revenue for the nine months ended
June 30, 1996, from 9.4% for the corresponding period of 1995. The decrease was
primarily attributable to the use of operating leases rather than capital leases
to acquire new equipment during the period, and a $1,976,496 net gain on the
sale of property and revenue equipment during the 1996 period compared with a
net gain of $827,196 during the 1995 period.
Rent decreased to 3.7% of revenue for the nine months ended June 30,
1996, from 4.0% for the corresponding period of 1995 as the Company purchased
equipment formerly held under capital leases at the beginning of the 1996 period
before adding equipment under operating leases later in the period.
As a result of the foregoing, the Company's operating ratio decreased
to 90.8% for the nine months ended June 30, 1996, from 92.1% for the
corresponding period of 1995.
Net interest expense decreased to 3.1% of revenue for the nine months
ended June 30, 1996, from 4.8% for the corresponding period in 1995 as a result
of lower average debt and capitalized lease balances and a decrease in the
Company's average interest rate in the 1996 period compared with the 1995
period.
As a result of the factors described above, pro forma net income
increased to $2,575,027 for the nine months ended June 30, 1996, from $1,039,538
for the corresponding period of 1995.
Liquidity and Capital Resources
The growth of the Company's business has required significant
investment in new revenue equipment that the Company historically has financed
with borrowings under installment notes payable to commercial lending
institutions and equipment manufacturers, equipment leases from third-party
lessors, borrowings under its line of credit, and cash flow from operations. The
Company's primary sources of liquidity currently are funds provided by
operations, and borrowings and leases with financial institutions and equipment
manufacturers.
The Company's primary source of cash flow from operations is net income
adjusted for depreciation and deferred income taxes. The Company's principal
uses of cash flow from operations are to service debt incurred to purchase new
revenue equipment and internally finance accounts receivable associated with
growth in the business. Net cash provided by operating activities was $6,646,239
for the nine months ended June 30, 1996. The primary sources of funds were net
income (which was $2,636,598 before a one-time, non-cash charge of $2,980,115
for deferred taxes attributable to termination of the Company's S corporation
election), increased by non-cash adjustments of $4,731,310 in depreciation,
$371,312 in deferred income taxes, $2,553,048 in accounts payable, accrued
liabilities and claims payable, and $365,125 in supplies and other assets. The
primary uses of funds were $1,462,986 to prepay licensing on revenue equipment
and $2,548,168 to internally finance the increase in accounts receivable
attributable to the growth of the business.
Net cash used in investing activities was $9,327,958 for the nine
months ended June 30, 1996, as the Company purchased $20,131,049 of new revenue
equipment, additional terminal land in Phoenix, Arizona, and began construction
of its new terminal in Salt Lake City, Utah. The Company sold revenue equipment
and its terminal in Jerome, Idaho during the period for $10,803,092. The Company
expects capital expenditures (primarily for revenue equipment, satellite
communications units, and the construction of a new main terminal and
headquarters facility), net of revenue equipment sales and trade-ins, to be
approximately $65.0 million in calendar 1996.
Net cash provided by financing activities was $5.9 million in the 1996
period, consisting primarily of approximately $19.7 million in net proceeds from
the offering, $17.5 million of new borrowings for the purchase of revenue
equipment and the construction of the new terminal, and payments of $30.7
million ($17.2 million of which resulted from proceeds of the offering) of
principal under the Company's long-term debt, line of credit, and capitalized
lease agreements. In addition, the Company paid approximately $605,000 in S
corporation dividends to its stockholders prior to its November 17, 1995 initial
public offering.
The Company maintains a $5 million, unsecured line of credit with a
financial institution. Borrowings on the line of credit bear interest at
one-half percent (.5%) above the 30-day London Interbank Offered Rate ("LIBOR")
in effect from time to time. The Company had not drawn against the line of
credit at June 30, 1996.
.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No reportable events or material changes occurred during the
quarter for which this report is filed.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
<S> <C> <C>
Number Description
3.1 * Articles of Incorporation
3.2 * Bylaws
4.1 * Articles of Incorporation
4.2 * Bylaws
4.3 * Formation Agreement dated May 31, 1995, among Richard D. Simon, Trustee of the Richard D. Simon
Trust, UTAD 2/12/93, Kelle Allen Simon, Arthur Lynn Simon (also known as Lyn Simon), Sherry Lee
Simon Bokovoy, Richard D. Simon, Jr. and Alban Lang.
10.2 * Outside Director Stock Option Plan.
10.3 * Incentive Stock Plan.
10.4 * ss.401(k) Plan.
10.5 * Exchange Agreement dated April 19, 1995, among Richard D. Simon, Trustee of the Richard D.
Simon Revocable Trust, UTAD 2/12/93, and Richard D. Simon as a sole proprietorship d/b/a R.D.
Simon Trucking, Kelle A. Simon, A. Lyn Simon, Sherry L. Simon Bokovoy, Richard D. Simon, Jr.,
Alban B. Lang, and Dick Simon Trucking, Inc., a Utah corporation.
10.6 * Formation Agreement dated May 31, 1995, among Richard D. Simon, Trustee of the Richard D. Simon
Trust, UTAD 2/12/93, Kelle Allen Simon, Arthur Lynn Simon (also known as Lyn Simon), Sherry Lee
Simon Bokovoy, Richard D. Simon, Jr. and Alban Lang.
10.10 * Plan of Merger dated April 19, 1995 between Freight Sales, Inc. and the Richard D. Simon Trust,
UTAD 2/12/93, Kelle A. Simon, Lyn Simon, Richard D. Simon, Jr. Sherry Simon Bokovoy, and Alban
Lang as officers, directors, and/or shareholders of Dick Simon Trucking, Inc., a Utah
corporation.
10.11 Loan Agreement (Line of Credit) dated April 29, 1996 (replaced loan agreement dated
December 1, 1995) between U.S. Bank of Utah and Simon Transportation Services Inc.
10.12 Loan Agreement (Headquarter's Loan) dated May 23, 1996 between U.S. Bank of Utah and Dick Simon
Trucking, Inc.
</TABLE>
* Incorporated by reference from the Company's Registration Statement
on Form S-1, Registration No. 33-96876, effective November 17, 1995.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SIMON TRANSPORTATION SERVICES INC., a
Nevada corporation
Date: August 11, 1996 By: /s/ Alban B. Lang
---------------- -----------------
(Signature)
Alban B. Lang
Treasurer and Chief Financial Officer
U.S. BANK
BUSINESS LOAN AGREEMENT
Borrower: SIMON TRANSPORTATION SERVICES. Lender: U.S. Bank of Utah
4646 SOUTH 500 WEST/P.O. BOX 26297 Corporate Banking
SALT LAKE CITY, UT 84126-0297 107 South Main Street
Salt Lake City, UT 84111
THIS BUSINESS LOAN AGREEMENT between SIMON TRANSPORTATION SERVICES INC.
("Borrower") and U.S. Bank of Utah ("Lender") Is made and executed on the
following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans and other
financial accommodations, Including those watch may be described on any exhibit
or schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are retorted to In tints Agreement Individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) In granting, renewing, or extending any Loan, Lender is relying upon
borrower's representations warranties, and agreements, as set forth in this
Agreement: (b) the granting, renewing, or extending of any Loan by Lender at all
times shall be subject to Lender's sole judgment and discretion; and {c) all
such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of April 29, 1996, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United Slates of
America.
Agreement. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means SIMON TRANSPORTATION SERVICES INC. The
word "Borrower" also includes, as applicable, all subsidiaries and affiliates
of Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and income, plus depreciation and amortization.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly, whether granted now
or m the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel Rust,
factor's lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
ERISA. The word "ERISA" means The Employee Retirement Income Security Act of
1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each and all
of the persons or entities granting a Security Interest in any Collateral for
The Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation all
Loans, together with all other obligations, debts and liabilities of Borrower to
Lender, or any one or more of them, as wed as all claims by Lender against
Borrower, or any one or more of them: whether now or hereafter existing,
voluntary or involuntary. due or not due, absolute or contingent. liquidated or
unliquidated; whether Borrower may be liable individually or jointly with
others; whether Borrower may be obligated as a guarantor, surety, or otherwise;
whether recovery upon such Indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such Indebtedness may be or hereafter
may become otherwise unenforceable.
Lender. The word "Lender" means U.S. Bank of Utah. its successors and assigns.
Liquid Assets. The words "Liquid Assets" mean Borrower's cash on hand plus
Borrower's readily marketable securities.
Loan. The word "Loan" or "Loans" means and includes without limitation any and
all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, it any, evidencing Borrower's Loan obligations
in favor of Lender, as well as any substitute. replacement or refinancing
note or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender, (b) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith: (c) liens of materialmen, mechanics warehousemen, or carriers, or other
like liens arising m The ordinary course of business and securing obligations
which are not yet delinquent: (d) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in The
ordinary course of business to secure indebtedness outstanding on The dale of
this Agreement or permitted to be incurred under the paragraph of this Agreement
filled "Indebtedness and Liens" (e) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by The Lender in
writing; and (I) those liens and security interest which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents. whether now or
hereafter existing, executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in The form of a lien,
charge, mortgage, deed of trust, assignment. pledge, chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale. trust receipt, lien or
line retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether created by law,
contract, or otherwise
SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act of
1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement to
indebtedness owed by Borrower to Lender m form and substance acceptable to
Lender.
Tangible Net Worth. The words Tangible Net Worth" mean Borrower's total assets
excluding all intangible assets (i.e., goodwill, trademarks, parents,
copyrights, organizational expenses, and similar intangible hems, but including
leaseholds and leasehold improvements) less total Debt.
Working Capital. The words Working Capital" mean Borrower's current assets,
excluding prepaid expenses, less Borrower's current liabilities.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lenders satisfaction of all of the conditions set
forth in this Agreement and in The Related Documents
Loan Documents. Borrower shall provide to Lender m form satisfactory to Lender
the following documents for the Loan: (a) the Note, (b) Security Agreements
granting to Lender security interest in the Collateral, (c) Financing Statements
perfecting Lenders Security Interests, (d) evidence of insurance as required
below: and (e) any other documents required under this Agreement or by Lender or
its counsel.
Borrower's Authorization. Borrower shall have provided in form and substance
satisfactory to Lender properly certified resolutions. duly authorizing The
execution and delivery of this Agreement, the Note and the Related Documents,
and such other authorizations and other documents and instruments as Lender or
its counsel, in their sole discretion, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges' and other expenses which are then due and payable as specified in this
Agreement or any Related Document.
Representations and Warranties. The representations and warranties set forth in
this Agreement, in the Related Documents, and in any document or certificate
delivered to Lender under this Agreement are true and connect.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good sending under the laws of the State of Nevada and is
validly existing and in good standing in all states in which Borrower is doing
business. Borrower has the full power and authority to own its properties and to
transact the businesses in which it is presently engaged or presently proposes
to engage. Borrower also is duly qualified as a foreign corporation and is in
good standing in all soles in which the failure to so qualify would have a
material adverse effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization. or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to Lender
truly and completely disclosed Borrower's financial condition as of the date of
this statement, and there has been no material adverse change in Borrower's
financial condition subsequent to the date of the most recent financial
statement supplied to Lender. Borrower has no material contingent obligations
except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required thereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
Properties. Except as contemplated by This Agreement or as previously disclosed
in Borrower's financial statements or in writing to Lender and as accepted by
Lender, and except for property tax liens for taxes not presently due and
payable, Borrower owns and has good tills to all of Borrower's properties tree
and clear of all Security Interests, and has not executed any security documents
or financing statements relating to such properties. All of Borrower's
properties are filled in Borrower's legal name, and Borrower has not used, or
bled a financing statement under, any other name for at least the last five (5)
years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance",
"disposal", "release", and "threatened release", as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (a) During the period of Borrower's
ownership of the properties, there has been no use. generation. manufacture,
storage, treatment, disposal, release or threatened release of any hazardous
waste or substance by any person on, under, about or from any of the properties.
(b) Borrower has no knowledge of, or reason to believe that there has been (i)
any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about or from
the properties by any prior owners or occupants of any of the properties, or
(ii) any actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant, contractor, agent
or other authorized user of any of the properties shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under, about or from any of the properties; and any such activity
shall be conducted in compliance with all applicable federal, sate, and local
laws, regulations, and ordinances, including without limitation those laws,
regulations and ordinances described above. Borrower authorizes Lender and its
agents to enter upon the properties to make such Inspections and tests as Lender
may deem appropriate to determine compliance of the properties with this section
of the Agreement. Any inspections or tests made by Lender shall be al Borrower's
expense and for Lender's purposes only and shall not be construed to create any
responsibility or inability on the pan of Lender to Borrower or to any other
Person. The representations and warranties contained herein are based on
Borrower's due diligence in investigating the properties for hazardous waste and
hazardous substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of This section of the
Agreement or as a consequence of any use. generation, manufacture, storage,
disposal, release or threatened release occurring prior to Borrower's ownership
or interest in the properties, whether or not the same was or should have been
known to Borrower. The provisions of This section of the Agreement, including
the obligation to indemnify, shall survive the payment of the indebtedness and
the termination or expiration of This Agreement and shall not be affected by
Lenders acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid Axes) against Borrower
IS pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.
Taxes, To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be bled, have been bled, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any security Agreements, or permitted
the filing or attachment of any Security interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may m any way be superior to Lender's Security
interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrowers Loan and Note and all of the Related
Documents are binding upon Borrower as well as upon Borrower's successor,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may have
any liability complies in all material respects with all applicable requirements
of law and regulations, and (i) no Reportable Event nor Prohibited Transaction
(as defined in ERISA) has occurred with respect to any such plan, (ii) Borrower
has no' withdrawn from any such plan or initiated steps to do so, (iii) no steps
have been taken to terminate any such plan, and (iv) there are no unfunded
liabilities other than those previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business. or
Borrower s Chief executive office, if Borrower has more than one place of
businesses located at 4646 SOUTH 500 WEST/P.O. BOX 26297, SALT LAKE CITY, UT
84t26~297. Unless Borrower has designated otherwise In writing This location IS
also the office or offices where Borrower keeps His records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith furnished
by Borrower to Lender for the purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all information hereafter
furnished by or on behalf of Borrower to Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified; and none of such information is or Will be incomplete by omitting to
state any material fact necessary to make such information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees that
Lender. without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower. Borrower
further agrees that the foregoing representations and warranties shall be
continuing In nature and shall remain in lull force and effect until such time
as Borrower's Indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last to occur
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims. Investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records m accordance with generally
accepted accounting principles, applied on a consistent basis, and permit Lender
to examine and audit Borrower's books and records al all reasonable times.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables, inventory
schedules, budgets, forecasts, tax returns, and other reports with respect to
Borrowers financial condition and business operations as Lender may request from
time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Tangible Net Worth. Maintain a minimum Tangible Net Worth of not less than
$23,000,000.00.
Other Ratio. Maintain a ratio of RATIO OF DEBT TO TANGIBLE NET WORTH: TOTAL
LIABILITIES INCLUDING OPERATING LEASES DIVIDED BY TANGIBLE NET WORTH; TESTED
ANNUALLY AS OF BORROWER'S FISCAL YEAR END BEGINNING WITH 9/30/96 of 4.25 to
1.00.
The following provisions shall apply for purposes of determining compliance with
the foregoing financial covenants and ratios: MEASURED QUARTERLY BASED ON
BORROWER'S FISCAL QUARTER. Except as provided above, all computations made to
determine compliance with the requirements contained In this paragraph shall be
made in accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
Insurance. Maintain are and other risk insurance, public liability insurance,
and such other insurance as Lender may require with respect to Borrower's
properties and operations. in form, amounts, coverages and with insurance
companies reasonably acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverage's
will not be cancelled or diminished without at least ten (10) days prior written
notice to Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any way by
any act, omission or default of Borrower or any other person. In connection with
all policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such loss payable or
other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the insurer
(b) the risks insured; to) the amount of the policy (d) the properties insured:
(e) the than current property values on the basis of which insurance has been
obtained, and the manner of determining those values; and (1) the expiration
dale of the policy. In addition, upon request of Lender (however not more often
than annually), Borrower will have an independent appraiser satisfactory to
Lender determine, as applicable, the actual cash value or representing cost of
any Collateral.
The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any
other such agreements,
Loan Fee. and Charges. In addition to all other agreed upon fees and
charges, pay the following: 1/4 of 1% of unused balance, payable quarterly in
arrears.
Loan Proceeds. Use all Loan proceeds solely for the following specific
purposes: WORKING CAPITAL & GENERAL CORPORATE PURPOSES.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and
obligations. including without limitation all assessments. taxes, governmental
charges, levies and liens. of every kind and nature. imposed upon Borrower or
its properties, income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, it unpaid, might become a lien or charge
upon any of Borrower's properties, income, or profits. Provided however.
Borrower will not be required to pay and discharge any such assessment. tax,
charge, levy, lien or claim so long as (a) the legality of the same shall be
contested in good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies, liens and
claims and will authorize the appropriate governmental official to deliver to
Lender at any time a written statement of any assessments, taxes, charges,
levies, liens and claims against Borrower's property - , income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions set
forth in this Agreement and In the Related Documents in a timely manner, and
promptly notify Lender if Borrower learns of the occurrence of any event which
constitutes an Event of Default under this Agreement or under any of the Related
Documents.
Operations. Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct Its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal tows.
ordinances, rules and regulations respecting its property - , charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee benefit
plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loam and Borrower's other
properties and to examine or audit Borrower's books, accounts. and records and
to make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
Compliance Certificate. Unless waived In writing by Lender, provide Lender NOT
REQUIRED and al the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other officer or
person acceptable to Lender, certifying that the representations and warranties
set forth In this Agreement are true and correct as of the date of the
certificate and further certifying that, as of the date of the certificate, no
Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects with
all environmental protection federal, state and local laws statutes, regulations
and ordinances; not cause or permit to exist, as a result of an intentional or
unintentional action or omission on its part or on the part of any third party,
on property owned and/or occupied by Borrower, any environmental activity where
damage may resell to the environment, unless such environmental activity is
Pursuant to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall furnish to
Lender promptly and in any event within shiny (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower's part in connection
with any environmental activity whether or not there is damage to the
environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes" mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or Its attorneys may
reasonably request to evidence and secure the Loans and to perfect all Security
Internals..
RECOVERY OF ADDITIONAL COSTS. 11 the Imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any faxes (except U.S. federal. state or local income or franchise
taxes Imposed on Lender), reserve requirement. capital adequacy requirements or
other obligations which would (a) increase the cost to Lender for extending or
maintaining the credit facility" to which this Agreement relates, (b) reduce the
amounts payable to Lender under this Agreement or the Related Documents. or (c)
reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefore within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable delay of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Continuity of Operations. (a) Engage In any business activities substantially
differed than those in which Borrower is presently engaged, (b) cease
operations. liquidate, merge, transfer. acquire or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock), provided, however
that notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends. If
Borrower Is a Subchapter S Corporations (as defined In the Internal Revenue Code
of 1986, as amended), Borrower may pay cash dividends on Its stock to its
shareholders from time to time in amounts necessary to enable the shareholders
to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and slate law which arise solely from their status as
Shareholders of the Subchapter S Corporation because of their ownership of
shares of stock of borrower, or (d) purchase or retire any of Borrower's
outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise
or entity' or (c) incur any obligation as surety or guarantor other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement. Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender, (b) Borrower or any Guarantor becomes insolvent, hiss
a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (c)
there occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor or in the value of any Collateral securing
any Loan (d) any Guarantor seeks, claims or otherwise attempts to limit, modify
or revoke such Guarantor's guaranty of the Loan or any other loan with Lender;
or (e) Lender In good faith deems itself insecure, even though no Event of
Default shall have occurred.
ACCESS LAWS. Without limiting the generality of any provision of this agreement
requiring Borrower to comply with applicable laws rules, and regulations,
Borrower agrees that it will at all times comply with applicable laws relating
to disabled access including, but not limited to, ail applicable idles of the
Americans with Disabilities Act of 199u.
CONTROLS AND MONITORING.
1. Borrower to provide Lender with annual CPA audited fiscal year-end financial
statement, Form 10-Q and Form 10-K.
2. Borrower to provide Lender with quarterly company-prepared interim financial
statements, Form 10-Q and Form 10-k.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessors security
interest in. and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other amount), including without
limitation all accounts held jointly with someone else and all amounts Borrower
may open in the future, excluding however all IRA and Keoqh amounts, and all
trust amounts for which the grant of a security interest would be prohibited by
law. Borrower authorizes Lender, to the extent permitted by applicable law, to
charge or setoff all sums owing on the Indebtedness against any and all such
amounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to perform
when due any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents, or failure of Borrower to comply
with or to perform any other term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Borrower or any Grantor under this Agreement or the
Related Documents is false or misleading in any material respect at the time
made or furnished, or becomes la" or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Rented Documents
ceases to be in full force and effect (Including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and for
any reason.
Insolvency. The dissolution or termination of Borrower's existence as a going
business. the insolvency of Borrower, the appointment of e receiver for any
part of Borrower's property. any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower, any creditor of any Grantor against
any collateral securing, the Indebtedness, or by any governmental agency. This
includes a garnishment, attachment, or levy on or of any of Borrower's deposit
accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur. except where
otherwise provided in this Agreement or the Rented Documents, all commitments
and obligations of Lender under This Agreement or the Rented Documents or any
other agreement Immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lenders option, all Indebtedness
immediacy will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the Insolvency subsection above, such acceleration shall be automatic and not
optional. In addition, Lender shall hew all the rights and remedies provided in
the Related Documents or available al law, in equity, or otherwise. Except as
may be prohibited by applicable law, all of Lenders rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to lake action to perform an obligation of
Borrower or of any Grantor shall not effect Lender's right to declare a default
and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matter set forth
in this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing end signed by the party or parties sought to
be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has. been delivered to Lender and accepted by
Lender In the State of Utah. It there Is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Salt Lake
County, the State of Utah Subject to the provisions on arbitration, this
Agreement shall be governed by and construed In accordance with the laws of the
State of Utah.
Arbitration. Lender and Borrower agree that all disputes, claims and
controversies between them, whether Individual, joint, or clash In nature,
arising from this Agreement or otherwise. including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any Collateral shall constitute a waiver of This arbitration agreement or be
prohibited by This arbitration agreement. This includes. without limitation,
obtaining injunctive relief or a temporary restraining order: invoking a power
of sale under any deed of trust or mortgage; obtaining a writ of attachment or
imposition of a receiver; or exercising any rights relating to personal
property, including taking or disposing of such property with or without
judicial process pursuant to Article 9 of the Uniform Commercial Code, Any
disputes, claims, or controversies concerning the lawfulness or reasonableness
of any act, or exercise of any right, concerning any Collateral. including any
claim to rescind. reform. or otherwise modify any agreement relating to the
Collateral shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any parry. Judgment
upon any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, wait, laches, and similar doctrines which would otherwise
be applicable In an action brought by a party shall be applicable in any
arbitration proceeding and the commencement of an arbitration proceeding shall
be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
Caption Headings. Caption headings in This Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
This Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lenders sale or
transfer, whether now or later. of one or more participation interests in the
Loans to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other mailer relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loans and will have
all the rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or against
any purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrowers obligation under the Loans
irrespective of the failure or insolvency of any holder of any interest in the
Loans. Borrower funkier agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lenders expenses,
including without limitation reasonable attorneys fees, incurred in connection
with the preparation, execution, enforcement, modification and collection of
this Agreement or in connection with the Loans made pursuant to this Agreement.
Lender may pay someone else to help collect the Loans and to enforce This
Agreement. and Borrower will pay reasonable attorneys' fees and Lender's legal
expenses, whether
or not there is a lawsuit, including reasonable attorneys' fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated postjudgment collection services.
Borrower also will pay any court costs, in addition to all other sums provided
by law.
Notices. All notices required to be given under this Agreement shall be given in
writing, may be sent by telefacsimile, and shall be effective when actually
delivered or when deposited with a nationally recognized overnight courier or
deposited in the United States mail, first class, Postage prepaid, addressed to
the party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving formal
written notice to the other varies' specifying that the purpose of the notice s
to change the parry s address. To the extent permitted by applicable law, if
there is more than one Borrower, notice to any Borrower will constitute notice
to all Borrowers. For notice purposes, Borrower will keep Lender informed at all
times of Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
funding shall not render that provision invalid or unenforceable as to any other
Persons or circumstances. If feasible, any Such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity
however, it the offending provision cannot be w modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of the Agreement makes it appropriate, including without limitation
any representation, warranty or covenant. the word .Borrower. as used herein
shall include all subsidiaries and affiliates of Borrower. Notwithstanding the
foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any
subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the benefit
of Lender, its successors and assigns. Borrower shall not, however, have the
right to assign its rights under the Agreement or any interest therein, without
the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement shall be considered to hew been relied upon by
Lender and will survive the making of the Loan and delivery to Lender of the
Related Documents, regardless of any investigation made by Lender or on Lender's
behalf.
Time Is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to hew waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a waiver
of such right or any other right. A waiver by Lender of a provision of this
Agreement shall not prejudice or constitute a waiver of Lender's right otherwise
to demand strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing between Lender
and Borrower, or between Lender and any Grantor, shall constitute a waiver of
any of Lender's rights or of any obligation of Borrower or of any Grantor as to
any future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the anal expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged vat agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF APRIL
29, 1996.
BORROWER:
SIMON TRANSPORTATION SERVICES INC.
By: /s/ Richard D. Simon
----------------------------------------
RICHARD D. SIMON, CHAIRMAN/PRESlDENT/CEO
LENDER:
U.S. Bank of Utah
By: /s/ Pauline Vosburgh
----------------------------------------
Authorized Officer
US BANK
PROMISSORY NOTE
Borrower: SIMON TRANSPORTATION SERVICES INC. Lender: U.S. Bank of Utah
4646 SOUTH 500 WEST/P.O. BOX 26297 Corporate Banking
SALT LAKE CITY, UT 84126~0297 107 South Main Street
Salt Lake City, UT 84111
Principal Amount: $5,000,000.00
Date of Note April 29,1996
PROMISE TO PAY. SIMON TRANSPORTATION SERVICES INC. ("Borrower") promises to
pay to U.S. Bank of Utah ("Lender"), or order, In lawful money of the United
States of America, the principal amount of Five Million & 00/100 Dollars
($5,000,000.00) or so much as may be outstanding, together with Interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan In one payment of all outstanding principal
plus all accrued unpaid Interest on December 1,1996. In addition, Borrower will
pay regular monthly payments of accrued unpaid Interest beginning June 1, 1996,
and all subsequent Interest payments are due on the same day of each month after
that. Interest on this Note is computed on a 365/360 simple interest basis that
is, by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Thirty (30) day London
Interbank Offered Rate (the index-). The Thirty (30) day London Interbank
offered rate in effect on the first day of each month (the "index-) shall be
based on the asking price per annum for U.S. Dollar deposits in the London
Interbank market as such once is communicated to the Lender through Telerate or
a similar quote reposing service. Lender will tell Borrower the current Index
rate upon Borrower's request. Borrower understands that Lender may make loans
based on other rates as well. The interest rate change will not occur more often
than each first day of each month and shall be increased or decreased based on
the index in effect on such date. The Interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 0.500 percentage points over
the Index. NOTICE: Under no circumstances will the interest rate on this Note be
more them the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender. (c) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect. (d) Borrower
becomes insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws. (e) Borrower is in default under any other note, security
agreement, lease agreement or lease schedule, loan agreement or other agreement,
whether now existing or hereafter made, between Borrower and U.S. Bancorp or any
direct or indirect subsidiary of U.S. Bancorp. (f) Any creditor tries to take
any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(9) Any of the events described in this default section occurs with respect to
any guarantor of this Note. (h) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 5.500
percentage points over the index. The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender that
amount. This includes, subject to any limits under applicable law, Lender's
reasonable attorneys) fees and Lender's legal expenses whether or not there is a
lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. If
not prohibited by applicable law, Borrower also wilt pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Utah. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Salt Lake County, the State of Utah Subject to the provisions on
arbitration, this Note shall be governed by and construed in accordance with the
laws of the State of Utah.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following party or parties are authorized as provided in
this paragraph to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: RICHARD D. SIMON, CHAIRMAN/PRESIDENT/CEO.
Advances under this note may be made at the written or oral request of any one
of the authorized individuals. Borrower agrees to be liable for all sums either:
(a) advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Note al any time may be evidenced by endorsements on this Note or
by Lender's infernal records, including daily computer print-outs. Lender will
have no obligation to advance funds under this Note if: (a) Borrower or any
guarantor is in default under the terms of this Note or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (e) Lender in
good faith deems itself insecure under this Note or any other agreement between
Lender and Borrower.
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether Individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right concerning any
collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing this Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
LATE CHARGE. If a payment is 15 days or more past due, borrower will be charged
a late charge of 5% of the delinquent payment.
GENERAL PROVISIONS, Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any of her person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan, or
release any parry or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral, and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
SIMON TRANSPORTATION SERVICES INC.
By: /s/ Richard D. Simon, President & CEO
----------------------------------------
RICHARD D. SIMON, CHAIRMAN/PRESIDENT/CEO
LENDER:
U.S. Bank of Utah
By: /s/ Pauline Vosburgh
----------------------------------------
Authorized Otttcer
U.S. BANK
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: SIMON TRANSPORTATION SERVICES INC. Lender: U.S. Bank of Utah
4646 SOUTH 500 WEST/P.O. BOX 26297 Corporate Banking
SALT LAKE CITY, UT 84126-0297 107 South Main Street
Salt Lake City, UT 84111
LOAN TYPE. This is a Variable Rate (0.500% over Thirty (30) day London
Interbank Offered Rate), Revolving Line of Credit Loan to a Corporation for
$5.000,000.00 due on December 1, 1996.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
Personal, Family, or Household Purposes or Personal Investment.
---
X Business (Including Real Estate Investment).
---
SPECIFIC PURPOSE. The specific purpose of this loan is: OPERATING LINE
WORKING CAPITAL & GENERAL CORPORATE PURPOSE.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $5,000,000.00 as follows:
Undisbursed Funds: $5,000,000.00
Note Principal: $5,000,000.00
FINAL AGREEMENT. Borrower understands that the loan documents signed in
connection with this loan are the final expression of the agreement between
Lender and Borrower and may not be contradicted by evidence of any alleged
oral agreement.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT
AND THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE tN BORROWER'S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO
LENDER. THIS AUTHORIZATION IS DATED APRIL 29,1996.
BORROWER:
SIMON TRANSPORTATION SERVICES INC.
By: /s/ Richard D. Simon
----------------------------------------
RICHARD D. SIMON, CHAIRMAN/PRESIDENT/CEO
PROMISSORY NOTE
$10,000,000.00 May 23, 1996
FOR VALUE RECEIVED, the undersigned, DICK SIMON TRUCKING, INC., a Utah
corporation ("Maker"), promises to pay to the order of U.S. BANK OF UTAH, a Utah
state banking corporation ("Payee"), at 107 South Main Street, Salt Lake City,
Utah 84111, or at such other place as Payee may from time to time designate, the
principal sum of TEN MILLION DOLLARS ($10,000,000.00), together with all
subsequent advances made, expenditures authorized and additional payments
provided for in this Promissory Note, and in any of the Loan Documents (defined
below).
1. Definitions. As used in this Note, the following terms shall have
the meanings set forth below:
"Cut-Off Date" means the date on which the Construction Phase ends
and the Permanent Financing Phase begins. The Cut-Off Date shall be the
date of issuance of a certificate of occupancy for the completed
Improvements by the appropriate governmental agency. The projected Cut-Off
Date is twelve (12) Months from the date of this Note. However, in no event
shall the Cut-Off Date be later than May 23, 1997, whether or not a
certificate of occupancy is issued prior to said date.
"Deed of Trust" means the Deed of Trust and Security Agreement
dated the same date as this Note, executed by Maker, as trustor, in favor
of Payee, as beneficiary, and encumbering the Property.
"Event of Default" means the occurrence and continuance of any one
of the events listed in paragraph 12 of this Note.
<PAGE>
"Improvements" means the truck terminal and office complex,
parking and other related facilities and improvements that Maker intends to
construct on the Property with the proceeds of the Loan.
"Interest Rate Adjustment Date" means the day on which, pursuant
to the terms of this Note, the effective accruing rate of interest under
this Note adjusts.
"Interest Rate Conversion Date" means the day on which the
effective accruing rate of interest under this Note, at Maker's election,
is converted from a floating rate of interest to either a fixed rate of
interest or an adjustable rate of interest as described in paragraph 5(c)
of this Note.
"Loan" means the credit facility advanced by Payee to Maker under
the terms and conditions of the Loan Agreement, in the original principal
amount of TEN MILLION DOLLARS ($10,000,000.00).
"Loan Agreement" means the Loan Agreement dated the same date as
this Note, executed by Maker, as borrower, and Payee, as lender, which
governs the disbursement and repayment of the Loan proceeds.
"Loan Documents" means the following documents dated the same date
as this Note entered into by Maker and Payee in conjunction with this Note:
the Loan Agreement, the Deed of Trust, the Assignment of Construction
Contract, the Assignment of Plans and Specifications and Rights under
Architectural Contract, the Security Agreement, the Borrower's Certificate
and Indemnity Regarding Hazardous Substances, the Certificate of Compliance
with Access Laws and Indemnification, Uniform Commercial Code Financing
Statements, and the Guaranty executed in favor of Payee.
- 2 -
<PAGE>
"Maturity Date" means May 25, 2004.
"Month" means a calendar month.
"Note" means this Promissory Note and any extensions, renewals or
modifications thereof.
"Payment Period" means the fifth day of a Month through and
including the fourth day of the next succeeding Month.
"Permanent Financing Phase" means that portion of the Loan term
commencing on the Cut-Off Date during which Maker repays the outstanding
Principal Indebtedness to Payee.
"Prime Rate" means that certain rate of interest regularly and
periodically published or generally announced by United States National
Bank of Oregon as its "Prime Rate." The Prime Rate is the rate of interest
Payee from time to time establishes as its prime rate and is not
necessarily the lowest rate of interest which Payee collects from any
borrower or class of borrowers.
"Principal Indebtedness" means at any time and from time to time
during the term of this Note all advances, disbursements, expenditures and
payments made by Payee after the date of this Note pursuant to the terms of
this Note or any of the Loan Documents.
"Property" means the real property owned or being acquired by
Maker and situate in Salt Lake County, Utah, as more particularly described
on Exhibit "A" attached to and incorporated by reference in this Note.
- 3 -
<PAGE>
"Weekly TCM Yield" means the Weekly Treasury Constant Maturity
(TCM) yield, as published from time to time, by the Federal Reserve Bank of
New York (publication H.15). For purposes of this Note, interpolation to
the nearest Month of the Weekly TCM Yield will be used for those maturities
not published by the Federal Reserve Bank of New York.
2. Security. This Note is given by Maker to Payee to evidence
Maker's obligations to repay the proceeds of the Loan, and is secured by the
Deed of Trust encumbering the Property.
3. Phases. For purposes hereof, the term of this Note shall be divided
into two (2) separate, distinct phases. During the Construction Phase, the Loan
proceeds shall be periodically disbursed for the purpose of: (a) constructing
the Improvements on the Property; and (b) paying for other such items as set
forth on the budget submitted to and approved by Payee in connection with the
Loan. During the Permanent Financing Phase, Maker shall repay to Payee the funds
advanced during the Construction Phase.
4. Interest Accruals, Payments During Construction Phase. During the
Construction Phase of the term of this Note, interest shall accrue on the
outstanding Principal Indebtedness and Maker shall make payments to Payee as
follows:
(a) The outstanding balance of the Principal Indebtedness, as
disbursed from time to time during the course of construction of the
Improvements, shall bear interest from the date of each disbursement at a
floating rate of interest which shall be calculated by subtracting from the
amount of the Prime Rate one percent (1.0%) per annum, which interest shall
be calculated on the basis of a year consisting of three
- 4 -
<PAGE>
hundred sixty (360) days. The applicable total annual interest rate, as
computed in accordance with the foregoing, shall be adjusted with each
change in the Prime Rate.
(b) Accrued interest, computed in accordance with the foregoing,
shall be due and payable on the fifth day of each Month hereafter until the
Cut-Off Date, whereupon all accrued and unpaid interest on the outstanding
Principal Indebtedness shall be due and payable in full.
(c) During the Construction Phase, to the extent there are Loan
proceeds available pursuant to the terms of the Loan Agreement, accrued
interest shall be paid by disbursement of Loan proceeds. Otherwise, Maker
shall pay the accrued interest to Payee without benefit of the Loan
proceeds on each interest payment date.
5. Interest Accruals During Permanent Financing Phase. During the
Permanent Financing Phase of the term of this Note, interest shall accrue on the
outstanding Principal Indebtedness as follows:
(a) Maker shall select an interest rate from among the following
interest rate options which rate of interest shall take effect as of the
Cut-Off Date:
(1) Interest may continue to accrue at the floating rate
described in paragraph 4(a) above.
(2) Interest may accrue at a fixed rate of interest for the
balance of the term of the Loan. The rate would be calculated by adding
two hundred (200) basis points to the Weekly TCM Yield (adjusted to a
constant maturity of seven years) in effect on that date which is
thirty (30) days before the Cut-Off Date.
- 5 -
<PAGE>
(3) Interest may accrue at an adjustable rate of interest in
accordance with the following:
(A) From and after the Cut-Off Date until the fifth
anniversary of this Note, the rate would be equal to two hundred
(200) basis points above the Weekly TCM Yield (adjusted to a
constant maturity of four years) in effect on that date which is
thirty (30) days before the Cut-Off Date.
(B) Under this interest rate option, the fifth
anniversary of this Note would be an Interest Rate Adjustment
Date. On such date the effective accruing rate of interest would
adjust to a rate equal to two hundred (200) basis points above the
Weekly TCM Yield (adjusted to a constant maturity of three years)
in effect on that date which is thirty (30) days before such
Interest Rate Adjustment Date. Such rate would remain in effect
until the Maturity Date. (b) Maker must notify Payee in writing of
Maker's interest rate selection
at least fifteen (15) working days prior to the Cut-Off Date. If Maker does
not timely notify Payee of Maker's interest rate selection, Maker shall be
deemed to have selected the floating rate option described in paragraph
5(a)(1) above.
(c) In the event Maker selects, or is deemed to have selected the
floating interest rate option, Maker shall have the one-time right to
convert the accruing rate of interest to either of the fixed rate or
adjustable rate options described in paragraph 5(a)(2) or (3) above. Maker
must notify Payee in writing of Maker's election to convert the
- 6 -
<PAGE>
interest rate and identify the interest rate option selected. The Interest
Rate Conversion Date shall be the first day of the next succeeding Payment
Period and such interest rate option shall remain in effect until the
Maturity Date.
6. Payments of Principal and Accrued Interest During Permanent
Financing Phase. During the Permanent Financing Phase, installments of principal
and accrued interest on the unpaid Principal Indebtedness shall be due and
payable monthly, commencing on the fifth day of the first Month following the
Cut-Off Date and continuing on the same day of each Month thereafter until the
Maturity Date whereupon the entire outstanding Principal Indebtedness, together
with all accrued and unpaid interest thereon, if not sooner paid, shall be due
and payable in full.
(a) If at the Cut-Off Date Maker selects, or is deemed to have
selected, the floating rate option described in paragraph 5(a)(1) above,
Maker's monthly payment obligation to Payee shall consist of: (1) the
accrued interest for the preceding Payment Period; and (2) the unpaid
Principal Indebtedness as of the Cut-Off Date multiplied by a fraction, the
numerator of which is one, and the denominator of which is one hundred
eighty.
(b) If at the Cut-Off Date Maker selects the fixed rate option
described in paragraph 5(a)(2) above, Maker's monthly payment obligation to
Payee would be set at an amount sufficient to amortize fully in
substantially equal monthly installments of principal and accrued interest
the Principal Indebtedness outstanding as of the Cut-Off Date using the
fixed interest rate described in paragraph 5(a)(2). The amortization term
used to calculate the required monthly payment would equal to one hundred
eighty (180)
- 7 -
<PAGE>
Months. Such monthly payment amount would be fixed for the balance of the
term of this Note. If after the Cut-Off Date Maker, pursuant to paragraph
5(c) above, has the right to convert the accruing rate of interest
hereunder and elects to convert the rate to the fixed rate option described
in paragraph 5(a)(2) above, the required monthly payment would be
recalculated based on the following:
(1) The interest rate would be calculated by adding two
hundred (200) basis points to the Weekly TCM Yield (adjusted to the
constant maturity which most closely approximates the then remaining
term of this Note) in effect on that date which is thirty (30) days
before the Interest Rate Conversion Date.
(2) The amortization term would be equal to one hundred eighty
(180) months, less the actual number of Months (rounded to the nearest
whole Month) elapsed between the Cut-Off Date and the Interest Rate
Conversion Date.
(3) The principal balance of the Loan used to calculate the
monthly payment amount would be the outstanding Principal Indebtedness
as of the Interest Rate Conversion Date.
(c) If at the Cut-Off Date Maker selects the adjustable rate
option described in paragraph 5(a)(3) above, Maker's monthly payment
obligation to Payee would be set exactly as described in paragraph 6(b)
above. However, on the Interest Rate Adjustment Date (described in
paragraph 5(a)(3)(B) above), the required monthly payment of principal and
accrued interest shall be recalculated and set at an amount sufficient to
amortize fully in substantially equal installments of principal and accrued
interest over an amortization term of one hundred twenty (120) Months the
Principal Indebtedness
- 8 -
<PAGE>
outstanding as of such Interest Rate Adjustment Date. Such monthly payment
amount would be fixed for the balance of the term of this Note. If after
the Cut-Off Date Maker, pursuant to paragraph 5(c) above, has the right to
convert the accruing rate of interest hereunder and elects to convert the
rate to the adjustable rate option described in paragraph 5(a)(3) above,
the required monthly payment would be recalculated based on the following:
(1) If the Interest Rate Conversion Date is before the fifth
anniversary of this Note, the required monthly payment amount would be
calculated using the factors described in paragraph 6(b)(1), (2) and
(3) above. When the interest rate adjusts effective as of the fifth
anniversary of this Note (as provided in paragraph 5(a)(3)(B) above),
the required monthly payment of principal and accrued interest would
adjust as described above in this paragraph 6(c).
(2) If the Interest Rate Conversion Date is on or after the
fifth anniversary of this Note, the required monthly payment amount
would be calculated using the factors described in paragraph 6(b)(1),
(2) and (3) above. Such monthly payment amount would be fixed for the
balance of the term of this Note. 7. Covenants Respecting Commencement
of Permanent Financing Phase.
Maker covenants with Payee that upon commencement of the Permanent Financing
Phase:
- 9 -
<PAGE>
(a) There shall be no material default of any material term,
covenant or condition contained in any of the Loan Documents or in any
other promissory note or deed of trust executed by Maker in favor of Payee.
(b) There shall be no material misstatement in any material
representation or warranty made by Maker to Payee in any Loan Document, or
in any material information submitted to Payee pursuant to the Loan
Agreement.
(c) Payee shall receive, at Maker's cost, a "date-down"
endorsement to the lender's policy of title insurance issued to Payee at
the closing of the Loan showing that the Deed of Trust continues to
constitute a valid first and prior lien on the Property for the full amount
of the then outstanding Principal Indebtedness. The date-down endorsement
shall include an ALTA 100 Endorsement and an ALTA 116 Endorsement.
(d) All materials and fixtures incorporated in or forming a part
of the Improvements shall have been purchased so that the absolute
ownership thereof shall become vested in Maker immediately upon delivery
thereof to the Property.
(e) Neither the Improvements nor any other part of the Property
shall have been materially injured or damaged by any casualty or condemned
or threatened with condemnation. In the event of such damage or
condemnation, Payee shall have received insurance or condemnation proceeds
sufficient in the judgment of Payee to effect the satisfactory restoration
of the Improvements or any other affected part of the Property, and no
other event shall have occurred which would adversely or materially affect
the ability of Maker to operate the Improvements profitably.
- 10 -
<PAGE>
(f) Payee shall have been furnished with an affidavit of Maker as
to whether Maker, or any of Maker's agents, have been served or threatened,
either orally or in writing, with any notice that a lien may be claimed for
amounts unpaid for labor performed or materials furnished by any person,
firm or corporation furnishing materials or performing labor of any kind in
the construction of the Improvements.
(g) Payee shall have been furnished with satisfactory mechanic's
lien waivers and receipts showing payment to all contractors,
subcontractors, persons, firms or corporations furnishing materials or
performing labor in the construction of the Improvements. Any cost overruns
during the course of constructing the Improvements shall be borne solely by
Maker.
(h) Payee shall have received satisfactory evidence of the
completion of the Improvements in accordance with the plans and
specifications therefor, the approval of such completion by the local
governmental authorities, and the approval of such completion by Payee's
inspecting architect or engineer.
(i) Payee shall have received such other certificates, assurances
and opinions as Payee may reasonably require respecting the completion of
the construction of the Improvements, including without limitation, a
certificate of occupancy issued by West Valley City, Utah.
(j) Maker shall have obtained, to Payee's reasonable satisfaction,
insurance against loss or damage to the Property, the buildings,
Improvements and fixtures thereon and all personalty used in connection
with the Property by fire, vandalism, malicious mischief, and any risks
covered by insurance of the type now known as "fire
- 11 -
<PAGE>
and extended coverage" in an amount not less than One Hundred Percent
(100%) of the full replacement value thereof. Such insurance policy or
policies shall contain a "Replacement Cost Endorsement" and shall name
Payee as an additional insured.
(k) Maker shall submit to Lender an update of the appraisal for
the Improvements submitted to Lender in connection with the closing of the
Loan signed by the appraiser in form and content acceptable to Lender. The
update shall: (1) recertify the value of the completed Improvements; (2)
substantiate the square footage of the completed Improvements; and (3)
certify that the materials used in the construction of the Improvements
conform to the original specifications described in the original appraisal.
(l) Maker shall assign to Payee as additional security for the
repayment of the Loan all of Maker's right, title and interest in and to
Maker's management contract for the completed Improvements.
(m) Payee shall have received to Payee's satisfaction such other
information, items and assurances as Payee may reasonably request.
8. Application of Payments. All payments on this Note shall, at the
option of Payee, be applied first to the payment of accrued interest and after
all such interest has been paid, any remainder shall be applied toward repayment
of any additional advances then outstanding, and the balance, if any, toward the
reduction of principal.
9. Additional Payments. Maker further agrees to pay on demand any
expenditures made by Payee in accordance with the Loan Documents, including, but
not limited to, the payment of taxes, special assessments, insurance premiums,
cost of completing the
- 12 -
<PAGE>
Improvements, cost of maintenance and preservation of any of the Improvements,
attorney fees and costs incurred in connection with any matter pertaining hereto
or to the security pledged to secure the Principal Indebtedness or any portion
thereof. At the election of Payee, all such expenditures may be added to the
unpaid balance of this Note and become a part of and on a parity with Principal
Indebtedness secured by the Loan Documents and shall accrue interest at the rate
as may be computed from time to time in accordance with the terms of this Note.
10. Incorporation of Loan Documents. The terms, conditions, covenants,
provisions, stipulations and agreements of the Loan Documents are hereby made a
part of this Note by reference to such documents in the same manner and with the
same effect as if the Loan Documents were fully set forth herein. Maker hereby
covenants and promises to abide by and comply with each and every covenant and
condition set forth in this Note and the Loan Documents.
11. Prepayment. Maker shall have the right to prepay all or a portion
of the Principal Indebtedness owing on this Note at any time or times prior to
the Maturity Date upon fifteen (15) days prior written notice to Payee. Maker
shall not be required to pay a prepayment penalty during any period of time when
the floating rate of interest described in paragraph 4(a) or 5(a)(1) above is in
effect. However, in all other instances, unless the prepayment is made on an
Interest Rate Adjustment Date, Maker may be charged a prepayment penalty based
on the following formula:
P (OTY - RTY) x T/12, where
(a) "P" means principal prepaid, or the principal portion of the
Loan prepaid on the date of prepayment.
- 13 -
<PAGE>
(b) "OTY" means original treasury yield, or the Weekly TCM Yield
at the time the Loan was made, having a term most closely approximating the
original term of this Note.
(c) "RTY" means reinvestment treasury yield, or the most recently
available Weekly TCM Yield at the date of prepayment, having a term most
closely approximating the remaining term of this Note on the date of
prepayment.
(d) "T" means the remaining time, in Months, to the Maturity Date
as of the date of prepayment. The prepayment penalty shall never be less than
zero. Other than Maker's obligation to pay any minimum charge and prepayment
penalty, Maker may pay all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by Payee in writing, relieve
Maker of Maker's obligation to continue to make payments under the payment
schedule. Rather, they will reduce the Principal Indebtedness and may result in
Maker making fewer payments.
12. Events of Default. The occurrence and continuance of any of the
following shall constitute an Event of Default under this Note: (a) the failure
of Maker to pay any sums herein specified when due; (b) the occurrence and
continuance of an event of default under any of the Loan Documents; or (c) if
Maker or any guarantor of the Loan shall: (1) apply for, or consent in writing
to the appointment of a receiver or trustee of all or substantially all of its
assets; (2) file a voluntary petition in bankruptcy or admit in writing an
inability to pay debts as they become due; (3) make a general assignment for the
benefit of creditors; (4) make and file a petition or an answer seeking a
reorganization or an arrangement with creditors or take advantage of any
insolvency law; (5) file an answer admitting the material allegations of a
petition
- 14 -
<PAGE>
filed in bankruptcy, reorganization or insolvency proceedings; (6) dissolve or
terminate existence, or become insolvent; or (7) be in default under any other
promissory note, deed of trust, security agreement or loan agreement executed by
Maker with respect to any other loan with Payee or any other obligation payable
to Payee.
13. Notice. Unless otherwise expressly provided by the terms of this
Note, or any other Loan Document, if an Event of Default shall occur, Payee
shall give written notice of such occurrence to Maker as follows:
(a) Maker shall not be entitled to any notice regarding defaults
with respect to regularly scheduled monthly payment of principal and
accrued interest under this Note. However, in the event of any other
monetary default, Maker shall have fifteen (15) days following receipt of
written notice thereof from Payee in which to cure such default.
(b) In the event of a nonmonetary default, Maker shall have
fifteen (15) days after receipt of written notice thereof from Payee
specifying the nonmonetary default in which to effect a cure. However, if
the nonmonetary default cannot reasonably be corrected within such fifteen
(15) day period, Maker shall have an additional thirty (30) days to remedy
such nonmonetary default if Maker notifies Payee of the manner in which the
nonmonetary default shall be cured, and if appropriate corrective action is
instituted within the initial fifteen (15) day period and is diligently
pursued thereafter.
14. Remedies. Upon occurrence and continuance of an Event of Default,
the remedies of Payee hereunder shall be governed by the following:
- 15 -
<PAGE>
(a) Payee, at Payee's election, may declare the entire unpaid
Principal Indebtedness, together with all accrued and unpaid interest
thereon, immediately due and payable. Any sum not so paid when due shall
bear interest, from the date due, until paid, at a rate of interest equal
to the then current Prime Rate plus five percent (5.0%), per annum.
(b) In addition, there shall be due and payable all reasonable
costs of collection or other costs incurred in the protection of the
interests of Payee, including reasonable attorney fees and costs, incurred
by Payee: (1) incident to the enforcement of the payment and performance
obligations of Maker hereunder; or (2) incident to any litigation relating
to or affecting the amount due under this Note or secured by any of the
Loan Documents resulting from any action or participation in, or in any
manner connected with, a case or proceeding involving Maker under Chapters
7, 11 or 13 of the Bankruptcy Code, or any successor statute thereto.
(c) If Payee exercises the power of sale provisions contained in
the Deed of Trust or initiates foreclosure proceedings, Maker shall pay all
costs incurred and attorney fees and costs as provided in the Loan
Documents.
(d) The failure of Payee to exercise any right or remedy provided
in this Note or in any of the Loan Documents upon the occurrence and
continuance of an Event of Default shall not be taken or construed to be a
waiver of any such right or remedy upon the happening of any subsequent
Event of Default.
15. Use of Undisbursed Loan Proceeds Upon Default. If during the
Construction Phase Maker defaults under the terms of this Note or under the
terms of any of the
- 16 -
<PAGE>
Loan Documents and Payee has not then disbursed all of the Loan proceeds and
holds a portion thereof, then at the election of Payee, all of such undisbursed
funds or proceeds may forthwith be expended by Payee for the purpose of
completing the Improvements to be constructed and for such purpose Maker hereby
makes, constitutes, and appoints a duly authorized officer of Payee as Maker's
true and lawful attorney-in-fact, coupled with an interest, to apply such
undisbursed funds for disbursing such funds for the completion of the
Improvements.
16. Late Payments. If any payment to be paid by Maker under the terms
of the Note is not received by Payee within fifteen (15) days after such
installment is due, Maker shall pay to Payee a late fee charge equal to five
percent (5.0%) of such late payment.
17. Substitution of Security. Acceptance by Payee of additional
security or guarantees for the performance of the terms and provisions herein
contained shall not in any way affect the liability of Maker.
18. Governing Laws. This Note is to be construed in accordance with
the laws of the State of Utah.
19. Notice. All notices and other communications under this Note shall
be sufficiently given and shall be deemed given on the fifth day following the
day on which the same have been mailed by registered or certified mail, postage
prepaid, addressed as follows:
If to Maker, to: Dick Simon Trucking, Inc.
4646 South 500 West
Salt Lake City, Utah 84123
Attn: Mr. Alban B. Lang, Chief Financial Officer,
Treasurer and Secretary
If to Payee, to: U.S. Bank of Utah
107 South Main Street
Salt Lake City, Utah 84111
Attn: Ms. Pauline Vosburgh
Corporate Banking
- 17 -
<PAGE>
Maker and Payee may, by notice given hereunder, designate any further or
different address to which subsequent notices or other communications directed
to them may be sent.
20. General. In the event this Note is executed, endorsed, guaranteed
or assumed by more than one person or corporation, all of the parties shall be
jointly and severally liable and do hereby waive presentment, demand, protest
and notice of nonpayment and of protest, and agree that any modifications of the
terms of payment or extension of time of payments shall in no way impair their
joint and several liability.
DATED effective as of the date first above written.
DICK SIMON TRUCKING, INC., a Utah corporation
By: /s/ Richard D. Simon, President
-------------------------------
RICHARD D. SIMON, President
- 18 -
<PAGE>
EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East- West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
U.S. BANK OF UTAH,
Lender
and
DICK SIMON TRUCKING, INC.,
Borrower
LOAN AGREEMENT
May 23, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I: DEFINITIONS.................................. 1
"Access Laws"...................................... 1
-----------
"Application for Disbursements".................... 2
-----------------------------
"Appraisal"........................................ 2
---------
"Architects"....................................... 2
----------
"Budget"........................................... 2
------
"Construction and Related Contracts"............... 2
----------------------------------
"Construction Phase"............................... 3
------------------
"Construction Representative"...................... 3
---------------------------
"Contractor"....................................... 3
----------
"Cut-Off Date"..................................... 3
------------
"Deed of Trust".................................... 3
-------------
"Default Interest Rate"............................ 3
---------------------
"Event of Default"................................. 4
----------------
"Guarantor"........................................ 4
---------
"Guaranty"......................................... 4
--------
"Improvements"..................................... 4
------------
"Interest Rate Adjustment Date".................... 4
-----------------------------
"Interest Rate Conversion Date".................... 4
-----------------------------
"Loan"............................................. 4
----
"Loan Documents"................................... 4
--------------
"Maturity Date".................................... 5
-------------
"Month"............................................ 5
-----
"Nonconstruction Related Costs".................... 5
-----------------------------
"Note"............................................. 5
----
"Payment Period"................................... 5
--------------
"Permanent Financing Phase"........................ 5
-------------------------
"Permitted Encumbrances"........................... 5
----------------------
"Plans and Specifications"......................... 6
------------------------
"Principal Indebtedness"........................... 6
----------------------
"Prime Rate"....................................... 6
----------
"Property"......................................... 6
--------
"Security Agreement"............................... 6
------------------
"Weekly TCM Yield"................................. 6
----------------
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<PAGE>
ARTICLE II: REPRESENTATIONS AND WARRANTIES.............. 7
------------------------------
2.1 Pending Litigation............................. 7
------------------
2.2 Title to Property.............................. 7
-----------------
2.3 Authority of Borrower.......................... 7
---------------------
2.4 Mechanic's Liens............................... 7
----------------
2.5 Taxes and Assessments.......................... 8
---------------------
2.6 Zoning......................................... 8
------
2.7 Financial Statements........................... 8
--------------------
2.8 Utility Service................................ 8
---------------
2.9 Licenses and Permits........................... 9
--------------------
2.10 Defaults and Violations....................... 9
-----------------------
2.11 No Conflicting Agreement...................... 9
------------------------
2.12 Construction and Related Contracts............ 9
----------------------------------
ARTICLE III: AMOUNT AND TERMS OF LOAN................... 10
3.1 Principal Amount of the Loan................... 10
3.2 Phases......................................... 10
3.3 Interest Accruals, Payments During Construction Phase 10
3.4 Interest Accruals During Permanent Financing Phase 11
3.5 Payments of Principal and Accrued Interest During Permanent Financing
Phase.......................................... 13
3.6 Loan Fees...................................... 16
3.7 The Security................................... 16
3.8 Disbursements for Construction Costs........... 17
3.9 Disbursement of Loan Proceeds for Payment of Interest During Construc-
tion Phase..................................... 18
3.10 Late Fee Charges.............................. 20
3.11 Prepayment.................................... 20
ARTICLE ICONDITIONS PRECEDENT TO DISBURSEMENTS UNDER
THE LOAN....................................... 20
4.1 Conditions Precedent to Initial Disbursement.. 20
4.2 Conditions Precedent to Additional Disbursements During Construction
Phase.......................................... 25
ARTICLE V: COVENANTS.................................... 28
5.1 Covenants Respecting Commencement of Permanent Financing Phase 28
5.2 General Covenants.............................. 31
- ii -
<PAGE>
ARTICLE VPROCEDURE FOR DISBURSEMENT OF LOAN PROCEEDS.... 38
6.1 Application for Disbursements................. 38
6.2 Supporting Documents.......................... 39
6.3 Disbursement.................................. 39
6.4 Retainage...................................... 40
6.5 Final Disbursements............................ 41
6.6 Cessation of Disbursement...................... 42
6.7 Payments to Lender............................. 43
ARTICLE VII: EVENTS OF DEFAULT; REMEDIES............... 43
---------------------------
7.1 Events of Default............................. 43
7.2 Notice........................................ 48
7.3 Remedies...................................... 49
7.4 Completion by Lender........................... 50
7.5 No Remedy Exclusive............................ 52
ARTICLE VIII: ADDITIONAL ADVANCES....................... 52
ARTICLE IX: MISCELLANEOUS............................... 53
9.1 Non-Waiver..................................... 53
9.2 Derivative Rights.............................. 53
9.3 Amendments..................................... 53
9.4 Binding Effect................................. 53
9.5 Waivers........................................ 53
9.6 Survival....................................... 54
9.7 Assignment..................................... 54
9.8 Sign........................................... 54
9.9 Notices........................................ 55
9.10 Indemnification............................... 55
9.11 Severability.................................. 55
9.12 Actions....................................... 56
9.13 Participation................................. 56
9.14 No Partnership................................ 56
9.15 Interpretation................................ 56
9.16 Governing Law................................. 57
9.17 Conflicts..................................... 57
9.18 Commissions................................... 57
9.19 Counterparts.................................. 57
9.20 Attorney Fees................................. 57
- iii -
<PAGE>
LIST OF EXHIBITS
Exhibit "A" Application for Disbursements
Exhibit "B" Permitted Encumbrances
Exhibit "C" Property Description
- iv -
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into effective as
of the 23rd day of May, 1996, by and between U.S. BANK OF UTAH, a Utah state
banking corporation ("Lender"), and DICK SIMON TRUCKING, INC., a Utah
corporation ("Borrower").
R E C I T A L S:
A. Borrower is the owner of certain real property located in Salt Lake
County, Utah on which Borrower desires to construct a truck terminal and office
complex, parking and other related facilities and improvements.
B. Borrower has applied to Lender for a loan for such improvements in the
principal amount of TEN MILLION DOLLARS ($10,000,000.00).
C. In full reliance upon the representations made by Borrower in this
Agreement and the Loan Documents (as defined in Article I of this Agreement),
Lender is willing to make the loan to Borrower upon the terms, covenants and
conditions contained in this Agreement and in the Loan Documents.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained in this Agreement, Borrower and Lender mutually agree as
follows:
ARTICLE I
DEFINITIONS
Unless the context clearly indicates otherwise, certain terms used in
this Agreement shall have the meanings set forth below:
"Access Laws" shall mean, collectively, the Americans with Disabilities
Act of 1990, the Fair Housing Amendments Act of 1988, and any other federal,
state or local laws or ordinances related to disabled access; or any statute,
rule, regulation, ordinance, order of
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governmental bodies and regulatory agencies, or order or decree of any court
adopted or enacted with respect thereto, as now existing or hereafter amended or
adopted.
"Application for Disbursements" shall mean the written form or forms,
required and approved by Lender, including, without limitation, the US Draw
Sheet, and AIA Forms G702 and G703, by which Borrower may request Lender to make
disbursements of Loan proceeds to pay for work performed and materials purchased
in connection with the construction of the Improvements on the Property (copies
of the approved forms are attached to and incorporated by reference in this
Agreement as Exhibit "A").
"Appraisal" shall mean the MAI/SRPA Appraisal relating to the Property
and the Improvements to be obtained by Lender pursuant to Section 4.1(c) of this
Agreement.
"Architects" shall mean John Wilhite and Valentiner Crane Brunjes Onyon
Architects, P.C., Borrower's project architects or supervising engineers.
"Budget" shall mean the approved detailed cost breakdown and budget of
the overall cost of the Improvements and the use of the Loan proceeds submitted
by Borrower to Lender as more particularly described in Section 4.1(b) of this
Agreement.
"Construction and Related Contracts" shall mean: (a) the Construction
Agreement entered into between Borrower and the Contractor for the construction
of the Improvements; (b) the Architect's Agreements entered into between
Borrower and the Architects relating to the design and specifications for the
Improvements; and (c) all engineering and other contracts to which Borrower is a
party relating to the design or construction of the Improvements on the
Property.
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"Construction Phase" shall mean that portion of the Loan term during
which the Improvements are constructed.
"Construction Representative" shall mean the independent architect or
engineer employed or retained by Lender, who, pursuant to Section 5.2(d) of this
Agreement, may, from time to time during the course of construction, review the
Plans and Specifications, make compliance inspections and render construction
progress reports to Lender.
"Contractor" shall mean Furst Construction Company, Inc., Borrower's
project general contractor or construction manager.
"Cut-Off Date" shall mean the date on which the Construction Phase ends
and the Permanent Financing Phase begins. The Cut-Off Date shall be the date of
issuance of a certificate of occupancy for the completed Improvements by the
appropriate governmental agency. The projected Cut-Off Date is twelve (12)
Months from the date of this Agreement. However, in no event shall the Cut-Off
Date be later than May 23, 1997, whether or not a certificate of occupancy is
issued prior to said date.
"Deed of Trust" shall mean the Deed of Trust and Security Agreement,
dated the same date as this Agreement, executed by the Borrower, as trustor, in
favor of Lender, as beneficiary, encumbering the Property, and, subject only to
the Permitted Encumbrances, constituting a valid first lien encumbrance upon the
Property, and encumbering the Improvements and all fixtures and building
materials, whether stored on or off the Property.
"Default Interest Rate" shall mean the Prime Rate, plus five percent
(5.0%), per annum, calculated on the basis of a three hundred sixty (360) day
year.
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"Event of Default" shall mean the occurrence and continuance of any of
the events listed in Section 7.1 of this Agreement.
"Guarantor" shall mean Simon Transportation Services, Inc., a Nevada
corporation.
"Guaranty" shall mean the Guaranty executed by the Guarantor in favor
of Lender by which the Guarantor guarantees the payment and performance of all
of Borrower's obligations under the Loan.
"Improvements" shall mean the truck terminal and office complex,
parking and other related facilities and improvements that Borrower intends to
construct on the Property with the proceeds of the Loan.
"Interest Rate Adjustment Date" means the day on which, pursuant to the
terms of the Note, the effective accruing rate of interest under the Note
adjusts.
"Interest Rate Conversion Date" means the day on which the effective
accruing rate of interest under the Note, at Maker's election, is converted from
a floating rate of interest to either a fixed rate of interest or an adjustable
rate of interest as described in Section 3.4(c) of this Agreement.
"Loan" shall mean the financing to be advanced by Lender to Borrower
pursuant to the terms of this Agreement in the maximum principal amount of TEN
MILLION DOLLARS ($10,000,000.00).
"Loan Documents" shall mean the following documents executed in
conjunction with and supporting this Agreement: the Deed of Trust; the Note;
the Assignments of Plans and Specifications and Rights Under Architectural
Contract; the Assignment of Construction
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Contract; the Security Agreement; Uniform Commercial Code Financing Statements;
the Guaranty; and any other documents between Lender and Borrower evidencing or
securing the Loan. (All of the Loan Documents are incorporated herein by
reference.)
"Maturity Date" means May 25, 2004.
"Month" means a calendar month.
"Nonconstruction Related Costs" shall mean those costs and expenses
shown on the Budget which are not payable for construction supplies, materials
and equipment but which are a necessary and related expense incurred by Borrower
in connection with the construction of the Improvements, including without
limitation, Borrower's reasonable expenditures for Loan fees, interest,
overhead, legal fees, title fees and premiums, insurance premiums and closing
costs associated with the Loan.
"Note"shall mean the Promissory Note, dated the same date as this
Agreement, in the original principal amount of the Loan, executed by Borrower,
as maker, and payable to the order of Lender, as payee.
"Payment Period" means the fifth day of a Month through and including
the fourth day of the next succeeding Month.
"Permanent Financing Phase" shall mean that portion of the Loan term
commencing on the Cut-Off Date during which Borrower repays the outstanding
Principal Indebtedness to Lender.
"Permitted Encumbrances" shall mean those liens, encumbrances and
matters affecting the Property listed on Exhibit "B" attached to and
incorporated by reference in this Agreement.
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"Plans and Specifications" shall mean the plans and specifications for
all or any portion of the Improvements, prepared by the Architects and approved
by Borrower and Lender.
"Principal Indebtedness" shall mean the outstanding principal amount of
the Loan, together with all Additional Advances made with respect to the Loan,
if any, and all additional payments provided for in the Loan Documents.
"Prime Rate" shall mean that certain rate of interest regularly and
periodically published or generally announced by United States National Bank of
Oregon as its "Prime Rate." The Prime Rate is the rate of interest that Lender
from time to time establishes as its prime rate and is not necessarily the
lowest rate of interest which Lender collects from any borrower or class of
borrowers.
"Property" shall mean that certain real property owned or being
acquired by Borrower and situate in Salt Lake County, Utah, as more particularly
described on Exhibit "C" attached to and incorporated by reference in this
Agreement.
"Security Agreement" shall mean the Security Agreement, dated the same
date as this Agreement, executed by Borrower, as debtor, in favor of Lender, as
secured party, and granting a security interest to Lender in all equipment,
machinery, appliances, floor coverings, furnishings, window coverings and
fixtures owned or to be owned by Borrower and to be used in connection with the
operation of the completed Improvements. However, the personal property subject
to the security interests granted by the Security Agreement does not include
Borrower's office equipment, trucks, trailers and other titled vehicles and
equipment.
"Weekly TCM Yield" means the Weekly Treasury Constant Maturity (TCM)
yield, as published from time to time, by the Federal Reserve Bank of New York
(publication H.15).
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For purposes of this Agreement and the Note, interpolation to the nearest Month
of the Weekly TCM Yield will be used for those maturities not published by the
Federal Reserve Bank of New York.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
2.1 Pending Litigation. There is no action, suit or proceeding
pending, including without limitation, condemnation proceedings, or, to the best
of Borrower's knowledge, threatened, against or affecting Borrower or the
Property, in any court of law or equity, or before any governmental or
quasi-governmental instrumentality, whether federal, state, county or municipal
which may result in any material adverse change in the business prospects,
profits or condition of Borrower.
2.2 Title to Property. Borrower has or concurrently with the execution
of this Agreement shall acquire good and marketable fee simple title in and to
the Property. Borrower has not conveyed or encumbered the Property, and except
for the Permitted Encumbrances, the Property is free and clear of all liens and
encumbrances.
2.3 Authority of Borrower. Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Utah.
Borrower possesses all requisite power and authority to enter into this
Agreement, to borrow money as contemplated hereby and to carry out the terms,
covenants and conditions of the Loan Documents.
2.4 Mechanic's Liens. There are no delinquent claims for labor,
architectural drawings, surveys, engineering plans, materials, supplies or other
services furnished upon the
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Property or the Improvements being constructed and to be constructed thereon,
and no notice of commencement or claim of lien affecting the Property or the
Improvements has been filed in Salt Lake County, Utah.
2.5 Taxes and Assessments. No taxes, assessments or other governmental
charges upon the Property are delinquent. The same shall be paid prior to
becoming delinquent. However, Borrower shall have the right to contest the same
diligently and in good faith so long as the Property does not thereby risk being
forfeited by tax sale, foreclosure upon a tax lien or otherwise.
2.6 Zoning. The construction of the Improvements and the proposed uses
thereof shall be conducted so as to comply, in all material respects, with all
applicable zoning, environmental protection, use and building codes, laws,
regulations and ordinances. Borrower has no knowledge of any violations
concerning the Property, the Improvements or the construction thereof of any
laws, ordinances, codes, requirements or orders of any governmental
instrumentality having jurisdiction over the Property.
2.7 Financial Statements. Any and all financial statements previously
delivered to Lender by Borrower, except as may be disclosed in the notes
thereto, accurately represent the financial condition of Borrower and reflect
accurately the assets and properties of Borrower. No material adverse change has
occurred in the financial condition of Borrower as reflected in the financial
statements since the dates thereof.
2.8 Utility Service. All utility services and facilities necessary
for the construction and use of the Improvements, including, but not limited to,
water supply, sanitary sewer facilities, electrical and telephone facilities
(including easements therefor) are or will be
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available at the boundaries of the Property so as not to impede construction and
use of the constructed Improvements because of a lack thereof.
2.9 Licenses and Permits. All necessary licenses and permits required
for the construction of the Improvements, including, without limitation, a
building permit, have been obtained.
2.10 Defaults and Violations. Borrower is not in default or in
violation with respect to any final judgment, writ, injunction, decree or
regulation of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which has jurisdiction over the property of Borrower.
2.11 No Conflicting Agreement. Neither the execution and delivery of
any of the Loan Documents by Borrower, nor the compliance by Borrower with the
terms, covenants and conditions of the Loan Documents will conflict with, or
constitute a default under any agreement or other instrument to which Borrower
is bound or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the Property.
2.12 Construction and Related Contracts. Except as disclosed to Lender,
the Construction and Related Contracts have not been amended, modified or
terminated and are in full force and effect. Borrower is not in default in the
observance or performance of any of Borrower's obligations under the
Construction and Related Contracts. In addition, Borrower has done all things
required to be done as of the date of this Agreement to keep unimpaired the
rights of Borrower under the Construction and Related Contracts.
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ARTICLE III
AMOUNT AND TERMS OF LOAN
3.1 Principal Amount of the Loan. The original principal amount of the
Loan shall be TEN MILLION DOLLARS ($10,000,000.00).
3.2 Phases. For purposes hereof, the term of the Loan shall be divided
into two (2) separate, distinct phases, the Construction Phase and the Permanent
Financing Phase. During the Construction Phase, Loan proceeds shall be
periodically disbursed for the purpose of constructing the Improvements on the
Property. During the Permanent Financing Phase, Borrower shall repay to Lender
the funds advanced during the Construction Phase. Borrower shall not be entitled
to any disbursements of Loan proceeds during the Permanent Financing Phase.
3.3 Interest Accruals, Payments During Construction Phase. During the
Construction Phase of the Loan, interest shall accrue on the outstanding
Principal Indebtedness and Borrower shall make payments to Lender as follows:
(a) Interest Rate During Construction Phase. The outstanding
balance of the Principal Indebtedness, as disbursed from time to time
during the course of construction of the Improvements, shall bear interest
from the date of each disbursement at a floating rate of interest which
shall be calculated by subtracting from the amount of the Prime Rate one
percent (1.0%) per annum, which interest shall be calculated based on a
year consisting of three hundred sixty (360) days. The applicable total
annual interest rate, as computed in accordance with the foregoing, shall
be adjusted with each change in the Prime Rate. Such rate shall be fixed
for the entire Construction Phase.
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(b) Interest Payment Dates. Accrued interest, computed in
accordance with the foregoing, shall be due and payable on the fifth day of
each Month until the Cut-Off Date, whereupon all accrued and unpaid
interest on the outstanding Principal Indebtedness shall be due and payable
in full.
(c) Payment of Interest. During the Construction Phase, to the
extent there are Loan proceeds available pursuant to the terms of this
Agreement, accrued interest shall be paid by disbursement of Loan proceeds
as provided in Section 3.8 below. Otherwise, Borrower shall pay the accrued
interest to Lender without benefit of the Loan proceeds on each interest
payment date.
3.4 Interest Accruals During Permanent Financing Phase. During the
Permanent Financing Phase of the term of the Loan, interest shall accrue on the
outstanding Principal Indebtedness as follows:
(a) Interest Rate Options. Borrower shall select an interest rate
from among the following interest rate options which rate of interest shall
take effect as of the Cut-Off Date:
(1) Interest may continue to accrue at the floating rate
described in Section 3.3(a) above.
(2) Interest may accrue at a fixed rate of interest for the
balance of the term of the Loan. The rate would be calculated by adding
two hundred (200) basis points to the Weekly TCM Yield (adjusted to a
constant maturity of seven years) in effect on that date which is
thirty (30) days before the Cut-Off Date.
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(3) Interest may accrue at an adjustable rate of interest in
accordance with the following:
(A) From and after the Cut-Off Date until the fifth
anniversary of the Note, the rate would be equal to two hundred
(200) basis points above the Weekly TCM Yield (adjusted to a
constant maturity of four years) in effect on that date which is
thirty (30) days before the Cut-Off Date.
(B) Under this interest rate option, the fifth
anniversary of the Note would be an Interest Rate Adjustment Date.
On such date the effective accruing rate of interest would adjust
to a rate equal to two hundred (200) basis points above the Weekly
TCM Yield (adjusted to a constant maturity of three years) in
effect on that date which is thirty (30) days before such Interest
Rate Adjustment Date. Such rate would remain in effect until the
Maturity Date. (b) Selection of Interest Rate by Borrower.
Borrower must notify
Lender in writing of Borrower's interest rate selection at least fifteen
(15) working days prior to the Cut-Off Date. If Borrower does not timely
notify Lender of Borrower's interest rate selection, Borrower shall be
deemed to have selected the floating rate option described in Section
3.4(a)(1) above.
(c) Conversion of Interest Rate. In the event Borrower selects, or
is deemed to have selected the floating interest rate option, Borrower
shall have the one-time right to convert the accruing rate of interest to
either of the fixed rate or adjustable
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rate options described in Section 3.4(a)(2) or (3) above. Borrower must
notify Lender in writing of Borrower's election to convert the interest
rate and identify the interest rate option selected. The Interest Rate
Conversion Date shall be the first day of the next succeeding Payment
Period and such interest rate option shall remain in effect until the
Maturity Date.
3.5 Payments of Principal and Accrued Interest During Permanent
Financing Phase. During the Permanent Financing Phase, installments of principal
and accrued interest on the unpaid Principal Indebtedness shall be due and
payable monthly, commencing on the fifth day of the first Month following the
Cut-Off Date and continuing on the same day of each Month thereafter until the
Maturity Date whereupon the entire outstanding Principal Indebtedness, together
with all accrued and unpaid interest thereon, if not sooner paid, shall be due
and payable in full.
(a) Payments under Floating Rate Option. If at the Cut-Off Date
Borrower selects, or is deemed to have selected, the floating rate option
described in Section 3.4(a)(1) above, Borrower's monthly payment obligation
to Lender shall consist of: (1) the accrued interest for the preceding
Payment Period; and (2) the unpaid Principal Indebtedness as of the Cut-Off
Date multiplied by a fraction, the numerator of which is one, and the
denominator of which is one hundred eighty.
(b) Payments under Fixed Rate Option. If at the Cut-Off Date
Borrower selects the fixed rate option described in Section 3.4(a)(2)
above, Borrower's monthly payment obligation to Lender would be set at an
amount sufficient to amortize fully in substantially equal monthly
installments of principal and accrued interest the
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Principal Indebtedness outstanding as of the Cut-Off Date using the fixed
interest rate described in Section 3.4(a)(2). The amortization term used to
calculate the required monthly payment would equal to one hundred eighty
(180) Months. Such monthly payment amount would be fixed for the balance of
the term of the Loan. If after the Cut-Off Date Borrower, pursuant to
Section 3.4(c) above, has the right to convert the accruing rate of
interest hereunder and elects to convert the rate to the fixed rate option
described in Section 3.4(a)(2) above, the required monthly payment would be
recalculated based on the following:
(1) The interest rate would be calculated by adding two
hundred (200) basis points to the Weekly TCM Yield (adjusted to the
constant maturity which most closely approximates the then remaining
term of the Note) in effect on that date which is thirty (30) days
before the Interest Rate Conversion Date.
(2) The amortization term would be equal to one hundred eighty
(180) Months, less the actual number of Months (rounded to the nearest
whole Month) elapsed between the Cut-Off Date and the Interest Rate
Conversion Date.
(3) The principal balance of the Loan used to calculate the
monthly payment amount would be the outstanding Principal Indebtedness
as of the Interest Rate Conversion Date.
(c) Payments under Adjustable Rate Option. If at the Cut-Off Date
Borrower selects the adjustable rate option described in Section 3.4(a)(3)
above,
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Borrower's monthly payment obligation to Lender would be set exactly as
described in Section 3.5(b) above. However, on the Interest Rate Adjustment
Date (described in Section 3.4(a)(3)(B) above), the required monthly
payment of principal and accrued interest shall be recalculated and set at
an amount sufficient to amortize fully in substantially equal installments
of principal and accrued interest over an amortization term of one hundred
twenty (120) Months the Principal Indebtedness outstanding as of such
Interest Rate Adjustment Date. Such monthly payment amount would be fixed
for the balance of the term of the Loan. If after the Cut-Off Date
Borrower, pursuant to Section 3.4(c) above, has the right to convert the
accruing rate of interest hereunder and elects to convert the rate to the
adjustable rate option described in Section 3.4(a)(3) above, the required
monthly payment would be recalculated based on the following:
(1) If the Interest Rate Conversion Date is before the fifth
anniversary of the Note, the required monthly payment amount would be
calculated using the factors described in Section 3.5(b)(1), (2) and
(3) above. When the interest rate adjusts effective as of the fifth
anniversary of the Note (as provided in Section 3.4(a)(3)(B) above),
the required monthly payment of principal and accrued interest would
adjust as described above in this Section 3.5(c).
(2) If the Interest Rate Conversion Date is on or after the
fifth anniversary of the Note, the required monthly payment amount
would be calculated using the factors described in Section 3.5(b)(1),
(2) and (3) above.
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Such monthly payment amount would be fixed for the balance of the term
of the Loan.
3.6 Loan Fees. Borrower shall pay to Lender a Loan initiation fee in
the amount of SIXTY-TWO THOUSAND FIVE HUNDRED DOLLARS ($62,500.00) upon
execution of this Agreement.
3.7 The Security. The Loan, as evidenced by the Note, shall be
secured as follows:
(a) Deed of Trust. The Note shall be secured by the Deed of Trust
in form and content satisfactory to Lender. The Deed of Trust shall be
executed and acknowledged by Borrower, as trustor, and shall constitute:
(a) a first and prior lien and encumbrance upon the Property, subject only
to the Permitted Encumbrances; and (2) an encumbrance upon the Improvements
and all fixtures and building materials, whether stored on or off the
Property.
(b) Assignment of Construction and Related Contracts. The Note
shall be secured by separate assignments of the Construction and Related
Contracts in form and content satisfactory to Lender.
(c) Consent of Architect and Contractor. Borrower shall procure,
to Lender's satisfaction, an agreement or declaration from the Architects
and the Contractor that, in the event of Borrower's default under the Loan
Documents and upon receipt of assurance from Lender that the payments
required to be made under the Construction and Related Contracts will be
made by Lender, the Architects and the Contractor will complete the
construction of the Improvements in accordance with the
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Plans and Specifications, cost estimates and budgets previously submitted
to and approved by Borrower and Lender, and will recognize Lender as a
substitute for Borrower under the Construction and Related Contracts.
(d) Security Agreement. The Note shall also be secured by the
Security Agreement, in form and content satisfactory to Lender, executed by
Borrower and granting a first and prior position security interest in the
collateral described in the Security Agreement.
(e) Guaranty. The Note shall be guaranteed by the Guaranty, in
form and content satisfactory to Lender, executed by the Guarantor in favor
of Lender.
(f) Assignment of Loan Proceeds. As additional security for the
payment of the Note, Borrower hereby assigns and pledges to Lender all of
Borrower's right, title and interest in and to the proceeds of the Loan to
secure any and all of Borrower's obligations under the Loan Documents,
subject only to Borrower's right to have the funds disbursed in accordance
with the terms, covenants and conditions of this Agreement.
(g) Additional Security Agreements. Borrower shall execute and
deliver to Lender such additional security agreements and financing
statements with respect to the Property and the Improvements as may
reasonably be requested by Lender, all in form and content satisfactory to
Lender, as additional security for the Loan.
3.8 Disbursements for Construction Costs. Except as otherwise
provided herein, disbursements of the Loan proceeds shall be made on the basis
of the value of work in
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place, and for which the Contractor has received an invoice from a subcontractor
or supplier, as determined by Lender or, with respect to Nonconstruction Related
Costs, as provided in the Budget. Lender shall have no obligation to make
disbursements for the cost of materials not permanently in place, whether stored
on or off the Property, unless all materials, supplies or equipment that are
stored on the Property awaiting installation are either adequately insured to
Lender's satisfaction against casualty, theft or other losses, or Borrower, to
Lender's satisfaction, is insured with respect to the same. All such stored
materials, supplies or chattels must be incorporated into the Improvements
within thirty (30) days after delivery to the Property. In addition, unless
otherwise agreed by Lender, Lender's obligations to make disbursements for
Nonconstruction Related Costs shall be based solely on the schedule shown on the
Budget.
3.9 Disbursement of Loan Proceeds for Payment of Interest During
Construction Phase. During the Construction Phase, accrued interest on the
unpaid Principal Indebtedness shall be paid in accordance with the following:
(a) Payment Through Disbursement of Loan Proceeds. From and after
the initial disbursement of Loan proceeds, accrued interest on the
outstanding Principal Indebtedness shall be paid on a monthly basis. Lender
shall determine monthly the amount of accrued interest on the Loan,
computed in the manner provided in Section 3.3(a) of this Agreement, and
shall disburse to Lender on the date due from the available proceeds of the
Loan an amount equal to the accrued interest from the preceding Month on
the Loan.
(b) When Lender May Refuse to Disburse Loan Proceeds to Pay
Interest. Lender shall disburse to Lender from the available proceeds of
the Loan the
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accrued interest on the Loan as provided in Section 3.9(a) above until the
interest reserve (as shown on the Budget) is totally depleted. However,
Lender may, in Lender's sole discretion, refuse to disburse such interest
on the Loan at such time and so long as any of the following conditions
exists:
(1) An Event of Default shall have occurred and be continuing;
(2) Disbursements shall have been suspended or halted by
Lender for any valid reason as provided herein;
(3) There are insufficient proceeds remaining from the Loan to
pay projected construction costs and interest accruals on the Loan for
the remainder of the term of the Construction Phase as estimated by
Lender; or
(4) The construction of the Improvements shall not have been
completed by the Cut-Off Date.
If Lender elects not to disburse interest for any of the foregoing reasons,
Lender shall so notify Borrower in writing. Upon receipt of such notice,
Borrower shall be obligated to pay accrued interest on the Loan to Lender,
without the use of the Loan proceeds, in the manner and at the times
provided in the Note.
(c) Depletion of Interest Reserve. When the interest reserve (as
shown on the Budget) has been totally depleted, Lender shall so notify
Borrower in writing. Thereafter, Borrower shall be obligated to pay accrued
interest on the Loan to Lender, without use of the Loan proceeds, in the
manner and at the times provided in the Note.
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3.10 Late Fee Charges. If any payment required by this Agreement is
not paid when due, Borrower shall pay to Lender a late fee charge as specified
in the Note.
3.11 Prepayment. If Borrower elects to pay all or any portion of the
Principal Indebtedness before it is due, Borrower may be required to pay a
prepayment fee to Lender calculated in accordance with and on the terms
described in the Note.
ARTICLE IV
CONDITIONS PRECEDENT TO DISBURSEMENTS UNDER THE LOAN
4.1 Conditions Precedent to Initial Disbursement. Prior to the
disbursement of any of the Loan proceeds to Borrower, and as a condition
precedent to such initial disbursement under the Loan, all of the following
conditions must be satisfied as determined by Lender, in Lender's sole
discretion:
(a) Authority of Borrower. Borrower and the Guarantor shall each
deliver to Lender a certified copy of its articles of incorporation and
bylaws, together with any and all amendments thereto. Borrower shall also
provide Lender with: (1) a certificate of good standing relating to
Borrower issued by the Utah Department of Commerce; and (2) a certified
resolution authorizing Borrower to enter into the transactions contemplated
by this Agreement. In addition, the Guarantor shall provide Lender with:
(i) a certificate of good standing relating to the Guarantor issued by the
Nevada Secretary of State; (ii) a certificate of qualification relating to
the Guarantor issued by the Utah Department of Commerce; and (iii) a
certified resolution authorizing the Guarantor to enter into the Guaranty
and to guarantee the obligations of Borrower under this Agreement and the
Loan Documents. Such resolutions shall designate and authorize
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the individual or individuals executing the Loan Documents in behalf of
Borrower and the Guarantor to execute and deliver the same.
(b) Budget. Borrower shall furnish the Budget to Lender, in form
and content satisfactory to Lender. The Budget shall contain a detailed
cost breakdown of the overall cost of the Improvements and use of the Loan
proceeds, including, but not limited to, construction costs of the
Improvements, both on-site and off-site, the cost of fixtures and
equipment, Loan fees, land acquisition costs (if applicable),
Nonconstruction Related Costs and such other matters as may be required by
Lender. The Budget shall be signed and approved by Borrower.
(c) Appraisal. Lender shall obtain the Appraisal, at Borrower's
expense. The Appraisal must be dated no earlier than six (6) Months prior
to the date of closing of the Loan and provide a value for the completed
Improvements acceptable to Lender in an amount sufficient to maintain a
maximum loan to value ratio of 75%.
(d) Mortgagee Title Commitment. Borrower shall furnish to Lender,
at the cost and expense of Borrower, a binding commitment on an A.L.T.A.
form for a mortgagee's title insurance policy or construction binder in the
maximum principal amount of the Loan, i.e., TEN MILLION DOLLARS
($10,000,000.00), issued by a title insurance company acceptable to Lender,
insuring or committing to insure that the lien of the Deed of Trust shall
constitute a valid first mortgage lien on and against the Property and all
of the Improvements, subject only to the Permitted Encumbrances. In
addition, the policy issued pursuant to such commitment or binder shall:
(1) insure that the Property is free and clear of all liens, encumbrances
and exceptions, except the
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Permitted Encumbrances; (2) set forth a complete and accurate description
of the Property; (3) have attached thereto copies of all instruments which
appear as exceptions to title in the commitment (if not previously
delivered to Lender); and (4) contain such endorsements upon issuance as
may be reasonably required by Lender, including without limitation, an ALTA
Endorsements 102.5 (relating to the foundation now in place on the
Property) and 111.5. Lender shall not be obligated to disburse any portion
of the Loan proceeds until after the recordation of such documents as may
be required by the commitment to permit the title company to insure the
Deed of Trust in a manner consistent with the commitment. In addition,
Lender must receive written confirmation thereof by endorsement or issuance
of the policy to Lender.
(e) Off-Site and On-Site Improvements. Borrower shall provide
Lender with evidence that all off-site and on-site improvements, including
but not limited to, water and sewer systems, natural gas, telephone systems
and utility lines for electricity have been completed or will be available
to the Property (including easements therefor) in such manner as to assure
Lender that construction of the Improvements will not be impeded by a lack
thereof.
(f) Permits. Borrower shall provide Lender with a copy of the
building permit and any other permits and business licenses as may be
required by each applicable governmental authority.
(g) Survey. Borrower shall deliver to Lender two (2) copies of an
A.L.T.A. survey of the Property prepared by a professional land surveyor or
engineer certified to Lender as such.
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(h) Zoning. Borrower shall provide Lender with evidence
satisfactory to Lender that all Improvements and the proposed uses thereof
conform in all respects with applicable zoning, use and building codes,
laws, regulations, and ordinances, or that appropriate variances have been
obtained.
(i) Insurance. Borrower shall obtain, to Lender's reasonable
satisfaction, the insurance policies covering the perils, with the limits
and in the form described in the Deed of Trust.
(j) Flood Insurance. If the Property is located in a special flood
hazard area as identified by the Federal Insurance Administration, Borrower
shall obtain federally subsidized flood insurance covering the risk of
damage to the Improvements located or to be installed upon the Property
caused by flooding in the total amount of the Loan or for the maximum
amount of subsidized insurance available, whichever is less. In lieu of
such flood insurance, Borrower shall submit to Lender evidence satisfactory
to Lender that no part of the Property is, or will be, within an area
designated as a flood hazard area by the Federal Insurance Administration.
(k) Workmen's Compensation. Borrower shall cause the Contractor or
all subcontractors performing work on the Improvements to deliver to Lender
a certificate of workmen's compensation insurance, evidencing coverage
against liability arising from claims of workmen with respect to and during
the period of any work on or about the Property.
(l) Plans and Specifications. Borrower shall furnish to Lender
two (2) final sets of the approved Plans and Specifications.
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(m) Construction and Related Contracts. Borrower shall furnish to
Lender copies of each of the executed Construction and Related Contracts.
(n) Subcontractors. Borrower shall disclose to Lender in writing
the names of all subcontractors, persons, firms and corporations with whom
Borrower or the Contractor has contracted or intends to contract for the
construction of the Improvements or the furnishing of labor or materials
with respect thereto.
(o) Construction Schedule. Borrower shall submit to Lender a
schedule, reasonably acceptable to Lender, which shall specify the time for
the completion of the construction of the Improvements.
(p) Environmental Assessment Report. Borrower shall submit to
Lender a Phase I Environmental Assessment Report respecting the Property
prepared by a licensed and qualified environmental engineer in form and
content acceptable to Lender. In the event the report reveals the presence
of hazardous substances or potential risks relating to the probable
presence of hazardous substances on, in, or under the Property, Borrower,
at Lender's request and at Borrower's sole cost and expense, shall cause to
be prepared and delivered to Lender a Phase II Environmental Assessment
Report in form and content acceptable to Lender.
(q) Soil Report. Borrower shall deliver to Lender a copy of a soil
report from a registered engineer approved by Lender which states that: (1)
the soil condition will not prevent construction of the foundations for the
Improvements at a cost not in excess of the cost normally incurred for such
foundation in Salt Lake County; and
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(2) the soil will not require any special engineering treatment. The soil
report shall be approved by Lender prior to the commencement of
construction of the Improvements.
(r) Access Certificate. Each Architect shall have delivered to
Lender a certificate in form and substance acceptable to Lender regarding
the compliance of the proposed Improvements with the Access Laws.
(s) Notice of Commencement of Construction. The Contractor shall
have recorded in the official records of Salt Lake County, Utah, and Lender
shall have received a copy of the Contractor's recorded Notice of
Commencement of Construction on the Property.
(t) Miscellaneous Items. Borrower shall deliver to Lender such
other items, documents and evidences pertaining to the Loan as may
reasonably be requested by Lender or Lender's counsel.
4.2 Conditions Precedent to Additional Disbursements During
Construction Phase. Lender's obligation to make any additional disbursements of
the Loan proceeds during the Construction Phase shall be subject to the
satisfaction of the following conditions:
(a) Loan Current. There shall be no material default of any
material term, covenant or condition contained in any of the Loan Documents
or in any other promissory note or deed of trust executed by Borrower in
favor of Lender. However, Lender may, in Lender's sole discretion, make
disbursements under the Loan Documents notwithstanding the existence of
such a default and any disbursement so made shall be deemed to have been
made pursuant and subject to this Agreement.
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(b) Application for Disbursements. Borrower shall have submitted
to Lender and Lender shall have approved an Application for Disbursements
in accordance with the procedures set forth in Article VI of this
Agreement.
(c) Misrepresentations. There shall be no material misstatement in
any material representation or warranty made by Borrower to Lender in any
Loan Document, or in any material information submitted to Lender pursuant
to this Agreement or any of the Loan Documents.
(d) First Lien. The Deed of Trust shall continue to constitute a
valid first lien against the Property for the full amount of the Principal
Indebtedness, subject only to the Permitted Encumbrances. Lender, at
Lender's option and at Borrower's expense, may require a "date down"
endorsement to the Lender's policy of title insurance as evidence of the
continuing first lien position of the Deed of Trust.
(e) Materials. All materials and fixtures incorporated in or
forming a part of the Improvements shall have been purchased so that the
absolute ownership thereof shall become vested in Borrower immediately upon
delivery thereof of the Property.
(f) Cost to Complete. Lender shall have received and approved a
written estimate by Borrower of the cost of construction of the
Improvements theretofore incurred and an estimate of the cost of completing
the construction of the Improvements which shall be allocated in accordance
with the cost breakdowns set forth in the Budget. Lender may require such
additional certifications of "cost to complete" as Lender may deem
necessary. In the event a cost to complete estimate exceeds the remaining
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undisbursed Loan proceeds, Borrower for the Guarantor shall deposit with
Lender additional funds in an amount which, when added to the undisbursed
Loan proceeds, equals or exceeds the cost to complete estimate. Such
additional funds may be disbursed prior to any remaining Loan proceeds.
(g) Damage. Neither the Improvements nor any part of the Property
shall have been materially injured or damaged by any casualty or condemned
or threatened with condemnation. In the event of such damage or
condemnation, no additional disbursement of Loan proceeds shall be made
unless: (1) Lender shall have received insurance or condemnation proceeds
sufficient, in the judgment of Lender, to effect the satisfactory
restoration of the Improvements or the Property, and to permit the
completion of the Improvements prior to the completion date; and (2) no
other casualty shall have occurred which would adversely or materially
affect the ability of Borrower to construct the Improvements.
(h) Quality of Construction. Lender shall have determined, to
Lender's reasonable satisfaction, that all work performed was completed in
a good and workmanlike manner and that the completed Improvements are of a
value not less than the amount previously disbursed under the Loan therefor
plus the amount requested.
(i) Lien Waiver. Lender shall have been furnished with
satisfactory mechanic's lien waivers and receipts showing payment to the
Contractor and to each major subcontractor and supplier, or at Lender's
option, each other person, firm or corporation who furnished materials or
performing labor for the construction of the Improvements during the time
period which relates to the immediately preceding
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Application for Disbursement. All lien waivers submitted to Lender must
match the invoice or statement amounts submitted to Lender in support of
the Application for Disbursement for the corresponding time period.
ARTICLE V
COVENANTS
5.1 Covenants Respecting Commencement of Permanent Financing Phase.
Borrower covenants with Lender that upon commencement of the Permanent Financing
Phase:
(a) No Defaults. There shall be no material default of any
material term, covenant or condition contained in any of the Loan Documents
or in any other promissory note or deed of trust executed by Borrower in
favor of Lender.
(b) No Misrepresentations. There shall be no material misstatement
in any material representation or warranty made by Borrower to Lender in
any Loan Document, or in any material information submitted to Lender
pursuant to the Loan Agreement.
(c) Title Policy Endorsement. Lender shall receive, at Borrower's
cost, a "date-down" endorsement to the lender's policy of title insurance
issued to Lender at the closing of the Loan showing that the Deed of Trust
continues to constitute a valid first and prior lien on the Property for
the full amount of the then outstanding Principal Indebtedness. The
date-down endorsement shall include an ALTA 100 Endorsement and an ALTA 116
Endorsement. In addition, as additional foundations for buildings on the
Property are completed, Borrower shall obtain, at Borrower's cost, an ALTA
Endorsement 102.5 relating to each such completed foundation.
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(d) Ownership of Materials and Fixtures. All materials and
fixtures incorporated in or forming a part of the Improvements shall have
been purchased so that the absolute ownership thereof shall become vested
in Borrower immediately upon delivery thereof to the Property.
(e) No Casualty or Condemnation. Neither the Improvements nor any
other part of the Property shall have been materially injured or damaged by
any casualty or condemned or threatened with condemnation. In the event of
such damage or condemnation, Lender shall have received insurance or
condemnation proceeds sufficient in the judgment of Lender to effect the
satisfactory restoration of the Improvements or any other affected part of
the Property, and no other event shall have occurred which would adversely
or materially affect the ability of Borrower to operate the Improvements
profitably.
(f) Affidavit Regarding Mechanic's Liens. Lender shall have been
furnished with an affidavit of Borrower as to whether Borrower, or any of
Borrower's agents, have been served or threatened, either orally or in
writing, with any notice that a lien may be claimed for amounts unpaid for
labor performed or materials furnished by any person, firm or corporation
furnishing materials or performing labor of any kind in the construction of
the Improvements.
(g) Mechanic's Lien Waivers. Lender shall have been furnished
with satisfactory mechanic's lien waivers and receipts showing payment to
all contractors, subcontractors, persons, firms or corporations furnishing
materials or performing labor
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in the construction of the Improvements. Any cost overruns during the
course of constructing the Improvements shall be borne solely by Borrower.
(h) Evidence of Completion of Improvements. Lender shall have
received satisfactory evidence of the completion of the Improvements in
accordance with the Plans and Specifications, the approval of such
completion by the local governmental authorities, and the approval of such
completion by the Construction Representative.
(i) Certificate of Occupancy. Lender shall have received such
other certificates, assurances and opinions as Lender may reasonably
require respecting the completion of the construction of the Improvements,
including without limitation, a certificate of occupancy issued by West
Valley City, Utah.
(j) Insurance. Borrower shall have obtained, to Lender's
reasonable satisfaction, insurance against loss or damage to the Property,
the buildings, Improvements and fixtures thereon and all personalty used in
connection with the Property by fire, vandalism, malicious mischief, and
any risks covered by insurance of the type now known as "fire and extended
coverage" in an amount not less than One Hundred Percent (100%) of the full
replacement value thereof. Such insurance policy or policies shall contain
a "Replacement Cost Endorsement," a lender's loss payable endorsement 438
BFU naming Lender as loss payee, and shall name Lender as an additional
insured.
(k) Appraisal Recertification. Borrower shall submit to Lender an
update of the Appraisal signed by the appraiser in form and content
acceptable to Lender. The update shall: (1) recertify the value of the
completed Improvements; (2) substantiate the square footage of the
completed Improvements; and (3) certify that the
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materials used in the construction of the Improvements conform to the
original specifications described in the original Appraisal.
(l) Additional Assurances. Lender shall have received to Lender's
satisfaction such other information, items and assurances as Lender may
reasonably request.
5.2 General Covenants. Borrower agrees and covenants with Lender as
follows:
(a) Completion. Borrower shall erect, equip and complete the
construction of the Improvements with due diligence, and shall complete all
work on or before the first anniversary date of the Note. All construction
shall be in strict compliance with the Plans and Specifications and shall
be in full compliance with the terms of this Agreement.
(b) Modifications and Amendments. No material modifications of or
amendment to the Construction and Related Contracts or the Plans and
Specifications shall be made without obtaining the prior written approval
of Lender, after consultation with the Construction Representative, if
deemed necessary by Lender. In addition, unless the written consent of
Lender is first had and obtained, no work on the Improvements shall be
performed pursuant to any change order which, when aggregated with any
previous change orders, would result in an increase in construction costs
by an amount equal to or exceeding TWENTY-FIVE THOUSAND DOLLARS
($25,000.00). In the event Lender approves a change order which results in
an increase in the price for the Improvements by an amount in excess of
such amount, Borrower shall be required
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to pay all additional costs and expenses resulting from any such change
order out of Bor- rower's own funds and without use of the Loan proceeds,
unless and to the extent that Lender determines, in its sole discretion,
that the contingency reserve set forth in the Budget is sufficient to cover
the costs of such change order and still leave an adequate contingency
reserve for the construction of the remainder of the Improvements. To the
extent required by Lender, Borrower shall deposit with Lender the full
amount of all additional costs and expenses resulting from such change
order. Lender shall disburse such amount in accordance with the provisions
of Article VI of this Agreement for payment of such additional costs and
expenses. Lender may withhold disbursement of additional Loan proceeds
pending Borrower's deposit with Lender of the additional costs and expenses
resulting from such change orders.
(c) Assignment. Borrower shall not, without the prior written
consent of Lender, mortgage, assign, convey, transfer, sell or otherwise
dispose of or encumber Borrower's interest in the Property, the
Improvements, or any part thereof, or the income to be derived therefrom to
any person or entity.
(d) Right of Inspection. Lender and Lender's agents shall have at
all reasonable times during the construction of the Improvements: (1) the
right to enter upon and have free access to the Property; (2) the right to
inspect all work done, labor performed and materials furnished; and (3) the
right to inspect all books, contracts and records of Borrower relating
thereto. In connection therewith, Lender, at Borrower's expense, may retain
as a consultant, the Construction Representative, to review the Plans and
Specifications, make compliance inspections and render progress reports to
Lender
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during the term of the Loan. Borrower shall pay all costs incurred by
Lender for work rendered by the Construction Representative in connection
with the exercise of Lender's rights and remedies following the occurrence
of such Event of Default.
(e) Correction of Work. Borrower shall, upon demand of Lender,
correct any material defect in the Improvements or any departure from the
Plans and Specifications not approved by Lender. The disbursement of any
Loan proceeds shall not constitute a waiver of the right of Lender to
require compliance with this covenant with respect to any such defects or
departures from the Plans and Specifications not previously discovered by
Lender.
(f) No Encroachments. The Improvements shall be constructed
entirely upon the Property and will not encroach upon or overhang any
easement or right-of-way, nor upon the property of adjoining landowners.
When erected, the Improvements shall be wholly within all applicable
building restriction lines.
(g) Insurance. Borrower shall provide and maintain, at all times,
insurance coverage to the extent and in the amounts provided herein and in
the Loan Documents.
(h) Occurrence and Notice of Casualty. In the event of loss or
damage to the Improvements, or any portion of the Improvements, Borrower
shall immediately give notice thereof to Lender. Lender may, but without
any obligation to do so, make proof of loss, and each insurance company
concerned is hereby authorized and directed to make payment for such loss
directly to Lender. The insurance proceeds or any part thereof shall be
deemed part of the security for the Loan and shall be applied
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to restore or repair the portion of the Improvements damaged, provided that
any insurance proceeds not so applied may be applied by Lender, at Lender's
option, to reduce the Principal Indebtedness (whether or not then due and
payable). Except to the extent that insurance proceeds are received by
Lender and applied to the Principal Indebtedness, nothing herein contained
shall be deemed to excuse Borrower from repairing or maintaining the
Property and the Improvements as provided in the Deed of Trust or restoring
all damage or destruction thereto, regardless of whether there are
insurance proceeds available or whether any such proceeds are sufficient in
amount. The application or release by Lender of any insurance proceeds
shall not cure or waive any default or notice of default under this
Agreement or invalidate any act done pursuant to such notice.
(i) Security Agreements. No materials, fixtures or any other part
of the Improvements which, pursuant to Section 3.7 of the Agreement,
constitute a portion of the security for the Loan shall, without the prior
written approval of Lender, be purchased or installed under any security
agreement wherein the right is reserved or accrues to anyone to remove or
repossess such property or to have a security interest superior to the
security interest of Lender as evidenced by the Deed of Trust.
(j) Taxes and Impositions. Borrower shall promptly pay and
discharge all lawful taxes and assessments imposed upon the Property or
Borrower before they become past due and delinquent in accordance with the
procedures and upon the terms set forth in the Deed of Trust.
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(k) Payment for Services. Borrower shall promptly pay for all
services, labor and materials performed and furnished in connection with
the construction and operation of the Improvements and the installation and
operation of all equipment.
(l) Mechanic's Liens. Borrower shall take all reasonable
precautions to prevent the filing against the Property, or any portion
thereof, of any mechanic's, materialmen's or labor liens of any kind
whatsoever. If any such liens are filed, then Borrower shall take
reasonable steps to discharge promptly any and all of such liens. However,
Borrower may dispute and contest in the manner set forth in the Deed of
Trust any lien filed against the Property so long as such contest does not
materially impair Lender's security.
(m) Nuisances. Borrower shall not do or knowingly permit to be
done on or about the Property, or use or knowingly allow the Property to be
used for any unlawful, objectionable or other purpose which may constitute
a public or private nuisance or which may make void, voidable, cancelable
or increase the premium of any insurance policy covering the Property.
(n) Appraisal. If at any time during the term of this Agreement,
any governmental agency which regulates, controls or examines Lender, or
any successor or assign of Lender, determines that the form of the
appraisal is not in compliance with applicable governmental regulations,
Lender shall, at Borrower's expense, cause a new appraisal to be made or
shall cause the Appraisal to be supplemented so as to bring the form of the
Appraisal into compliance with such regulations and requirements.
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(o) Information. Borrower shall furnish to Lender with reasonable
promptness such data and information, financial and otherwise, concerning
Borrower as from time to time may reasonably be requested by Lender for
purposes of administering compliance with the Loan Documents.
(p) Notice. Borrower shall promptly inform Lender of the
occurrence of any event, which with the passage of time, the giving of
notice, or both, would constitute an Event of Default under this Agreement
or a default under any of the Loan Documents.
(q) Subcontracts. At request of Lender, Borrower shall cause to be
delivered to Lender copies of all executed contracts with all
subcontractors, persons, firms and corporations with whom Borrower or the
Contractor contracts for the construction of the Improvements or the
furnishing of labor or materials with respect thereto.
(r) Maximum Debt to Tangible Net Worth. Throughout the term of the
Loan, Borrower shall maintain on an annual basis (measured as of Borrower's
September 30 fiscal year end), a ratio of debt to tangible net worth of not
more than 4.25 to 1.00. For purposes hereof: (1) "debt" shall mean total
liabilities, including operating leases, as shown on Borrower's audited
financial statements; and (2) "tangible net worth" shall be the figure
shown on Borrower's audited financial statements under the heading "net
worth" less the value of Borrower's intangible assets, computed in
accordance with generally accepted accounting principles.
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(s) Minimum Tangible Net Worth. Throughout the term of the Loan,
Borrower shall maintain minimum tangible net worth (measured quarterly and
calculated as described in Section 5.2(r) above) shall be the sum of
TWENTY-THREE MILLION DOLLARS ($23,000,000.00). At each fiscal year end of
Borrower thereafter (beginning September 30, 1996), the minimum tangible
net worth requirement shall be increased by an amount equal to one-half
(50%) of Borrower's annual net profit after tax (as shown on Borrower's
fiscal year-end audited financial statements) for the just completed fiscal
year. The increased minimum amount shall then become the new minimum
tangible net worth figure for the next following fiscal year of Borrower.
(t) Access Laws. Borrower and the Property shall at all times
comply with the requirements of applicable Access Laws, as provided in the
Deed of Trust.
(u) Limitation on Development. Borrower shall leave undeveloped
the following described real property which is surrounded on all sides by
the Property:
All of the property formerly known as Lots 25, 26 and 27, Block 5, Town
of El Dorado Plat "A," together with one-half (1/2) the vacated street
and alleys abutting said lots.
Borrower shall allow the owner of the above-described real property
unimpeded access to such property. In the event Borrower or any other
entity owned or controlled by Borrower or under common ownership with
Borrower, either directly or indirectly, obtains title to such property
before the Note is repaid in full, Borrower or such other entity shall
promptly, at Lender's option, either amend the Deed of Trust or execute,
acknowledge and deliver to Lender a new deed of trust to encumber such
property as additional collateral for Borrower's obligations under the
Loan.
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ARTICLE VI
PROCEDURE FOR DISBURSEMENT OF LOAN PROCEEDS
The proceeds from the Loan, and any other funds that may be deposited
by Borrower pursuant to the terms hereof, shall be held by Lender and disbursed
in accordance with the following procedure:
6.1 Application for Disbursements. Borrower shall submit, not more
often than once each Month, at least ten (10) days before the desired
disbursement date and on written forms required or approved by Lender, an
Application for Disbursements for work performed or materials purchased in
connection with the construction of the Improvements, for which a disbursement
has not been previously made by Lender. Disbursements shall be made on the basis
of the value of work in place for which the Contractor has received an invoice
from a subcontractor or supplier, and approved Nonconstruction Related Costs (as
shown on the Budget) as determined by Lender, less any amounts previously paid
for such work, labor or materials, or for materials, fixtures and equipment
delivered to the Property. Each Application of Disbursements shall constitute:
(a) an affirmation that all of the representations and warranties set forth in
Article II of this Agreement remain true and correct as of the date of such
request, and unless Lender is notified to the contrary, prior to the
disbursement of the requested advance, will be true and correct on the date
thereof; and (b) a representation and warranty that the information set forth in
each such Application for Disbursements in accordance with the requirements of
this Agreement is true and correct. Disbursements shall be made from the
following sources of funds: first any funds that Borrower, pursuant to the
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terms of this Agreement, is required to deposit with Lender for disbursement;
and second, to the extent there are no other funds on deposit with Lender, the
Loan Proceeds.
6.2 Supporting Documents. Each Application for Disbursements shall be
accompanied by copies of all invoices or statements from major subcontractors
and suppliers for which payment is requested. Borrower shall submit or cause to
be submitted with each Application for Disbursements the lien waivers described
in Section 4.2(i) of this Agreement. In addition, Borrower shall submit to
Lender: (a) a certificate executed by the Architect, the Contractor and
Borrower, which shall be dated no earlier than seven (7) days prior to the date
on which a disbursement is requested, certifying that the work has been
performed in conformity with the Plans and Specifications and the requirements
of all applicable governmental authorities and that the materials supplied are
appropriate project expenditures; and (b) evidence reasonably satisfactory to
Lender that any materials, supplies and equipment that are being stored on the
Property awaiting installation are either adequately insured to Lender's
satisfaction against casualty and theft loss, or that Borrower, to Lender's
satisfaction, is bonded with respect to the same. It is understood that funding
of all cost overruns, if any, shall be the sole and complete responsibility of
Borrower and the Guarantor. Borrower shall furnish all other supporting
documents or certificates that may reasonably be required by Lender, including,
but not limited to, invoices, requests for payments from subcontractors and
other satisfactory evidence as to the amounts invoiced for work, labor and
materials incorporated into the Improvements.
6.3 Disbursement. Within ten (10) full business days after the
receipt of an Application for Disbursements and all required supporting
documents, Lender, after consulting
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with the Construction Representative, shall determine whether: (a) all work
usually done at the stage of construction attained when the disbursement is
requested has been completed in a good and workmanlike manner; (b) all
materials, supplies, equipment and fixtures usually furnished and installed at
such stage of construction have been so furnished and have either been installed
or are being stored on the Property awaiting installation; and (c) the Loan
proceeds for such work or materials, as shown on the Budget, are available for
payment of the requested items. If Lender determines to approve the Application
for Disbursements, Lender shall promptly deposit the approved disbursement
amount in Borrower's checking deposit account maintained with Lender. If Lender
determines to deny the Application for Disbursements, Lender shall notify
Borrower of the reasons for denial.
6.4 Retainage. Lender shall retain five percent (5%) of all
disbursements made under this Agreement. The amounts withheld for retainage may
become eligible for disbursement when: (a) one hundred percent (100%) of the
work to be performed by the Contractor, and each subcontractor or materialman as
defined and specified in the construction documents pertaining to the Contractor
or such subcontractor or materialman shall have been completed; or (b) an
individual building comprising a portion of the Improvements has been completed,
as evidenced by the issuance of a certificate of occupancy for such building.
Eligible retainage amounts shall be disbursed upon the following conditions:
(1) The Improvements affected by the eligible retainage amount
shall have been fully completed in accordance with the Plans and
Specifications therefor and shall have been reviewed and accepted by
the Architect, the Contractor, Borrower and the Construction
Representative;
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(2) The Contractor, subcontractor or materialman shall have
delivered to Lender a final lien waiver pertaining to work done in the
construction of such Improvements; and
(3) Borrower shall have delivered to Lender a release of lien
or posted an appropriate surety bond to discharge any and all existing
mechanic's or materialmen's liens affecting the Improvements which may
have been filed or notice thereof delivered to Lender by the Contractor
or such subcontractor or materialman. 6.5 Final Disbursements. Unless
expressly agreed otherwise by Lender, the
final disbursement with respect to the Improvements, representing any remaining
undisbursed Loan proceeds and retainages, shall not be made until the completion
of the construction of all of the Improvements and the acceptance thereof by
Borrower, or until all subcontractors and materialmen who have performed work or
supplied materials with respect thereto have executed and delivered to Lender
releases of claims of liens, whichever first occurs. However, the Improvements
shall not be considered complete for purposes of a final disbursement unless and
until: (a) the Architect has issued a certificate of substantial completion,
and, if required, by Lender, the Construction Representative shall have
certified such completion; (b) all the work requiring the inspection by
governmental authorities shall have been duly inspected and approved by such
authorities, including, without limitation, the issuance of a certificate or
certificates of occupancy; and (c) evidence that Borrower has received all
equipment guaranties, warranties and operation and maintenance manuals relating
to the completed Improvements. If proceedings shall have been instituted to
enforce a mechanic's or materialman's lien arising out
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of such construction, Lender shall not be obligated to make such final
disbursement, or any portion thereof, until such litigation shall have been
finally disposed of or the lien removed by bonding or otherwise.
6.6 Cessation of Disbursement. Lender may deny an Application for
Disbursements or cease disbursing Loan proceeds for any of the following
reasons:
(a) Failure to Comply with Loan Documents. Lender, at Lender's
election, may refuse to disburse Loan proceeds pursuant to an Application
for Disbursements submitted by Borrower upon the occurrence and continuance
of any of the following events: (1) a mechanic's or materialmen's lien is
filed against the Property which the title company will not insure or bond
against; (2) Borrower fails to comply with any material term, covenant or
condition of this Agreement, any of the Loan Documents or any other
document entered into by Borrower and Lender; (3) Lender determines that
the reasonable value of the work performed or materials furnished do not
justify the disbursement requested; or (4) Lender determines that the work
done up to that particular stage of construction of the Improvements has
not been done in a good and workmanlike manner. Lender may refuse to make
any further disbursement of the Loan proceeds until such events have been
satisfactorily remedied.
(b) Insufficient Funds. Lender, at Lender's election, may refuse
to disburse Loan proceeds if Lender determines that for any reason there
are insufficient undisbursed Loan proceeds remaining: (1) to enable
Borrower to complete the construction of the Improvements in accordance
with the terms and allocations set forth in the Budget, whether by reason
of cost overruns, unanticipated costs, undisclosed costs
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or the payment of the items described in Section 6.7 of this Agreement; or
(2) to pay projected interest accruals on the Loan for the remainder of the
term of the Loan as estimated by Lender. Lender may refuse to make any
further disbursements under the Loan until Borrower shall have deposited
with Lender such amounts as may be requested by Lender to enable Borrower
to complete the construction of the Improvements or to make interest and
other payments in accordance with the terms and allocations set forth in
the Budget. Any additional amounts or funds which Borrower deposits with
Lender pursuant to the provisions of this Section 6.6(b) shall be disbursed
by Lender prior to any further disbursements by Lender of the proceeds of
the Loan to which such additional amounts or funds are added.
6.7 Payments to Lender. Lender may disburse to Lender from the Loan
proceeds any sums payable to Lender, including, without limitation, recording
costs, title insurance costs, interest, insurance and taxes during construction,
attorney fees and costs incurred following the occurrence of an Event of
Default. Borrower may pay any of such items and, upon furnishing receipt
evidencing such payments, shall be entitled to reimbursement from the proceeds
of the Loan if, after making such reimbursement, there are sufficient funds to
complete the construction of the Improvements and such items are or should be
included in the Budget.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
7.1 Events of Default. The occurrence and continuance of any of the
following events shall constitute an Event of Default under this Agreement and
the Loan Documents:
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(a) Impairment to Deed of Trust Lien. The impairment, at any time,
of the priority of the lien of the Deed of Trust by any lien, encumbrance
or other defect (other than the Permitted Encumbrances), which lien,
encumbrance or other defect is not corrected within thirty (30) days after
notice to Borrower, or which Borrower fails or refuses to bond against.
(b) Assignment. Borrower, without the prior written consent of
Lender: (1) assigns this Agreement or any disbursement or advance to be
made hereunder, or any interest therein to any person or entity; (2)
applies the proceeds of any disbursement in any manner not specified and
approved by Lender in the Application for Disbursements therefor; or (3)
voluntarily or involuntarily conveys, transfers, assigns, mortgages,
pledges or encumbers the Property in any way other than as provided in this
Agreement.
(c) Completion of Improvements. The failure by Borrower to
complete the construction of the Improvements within the time prescribed by
Section 5.2(a) of this Agreement.
(d) Cessation of Construction. The cessation of the construction
of the Improvements for any period after the date hereof in excess of
fifteen (15) days, unless: (1) the cessation of construction is caused by
conditions beyond the control of Borrower, including, without limitation,
severe weather conditions, fire, strikes, labor disputes, delays in
delivery of materials and disruption of shipping; (2) Borrower makes
adequate provisions acceptable to Lender for the protection of materials
stored on-site and for the protection of the Improvements to the extent
then constructed against deterioration, loss,
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damage or theft; (3) Borrower furnishes to Lender satisfactory evidence
that such cessation of construction will not adversely affect or interfere
with the rights of Borrower under material contracts or subcontracts
relating to the construction of the Improvements; and (4) Borrower
furnishes to Lender reasonably satisfactory evidence that the completion of
the Improvements can be accomplished within the time specified in Section
5.2(a) of this Agreement.
(e) Security Interest in Construction Materials. The occurrence
and continuance of any of the following: (1) the execution by Borrower of
any security agreement creating a lien or encumbrance, other than the
Permitted Encumbrances, on any materials, fixtures or articles used in the
construction of the Improvements, or on any articles of personal property
located therein; (2) the purchase by Borrower or the incorporation into the
construction of the Improvements of any materials, fixtures or articles to
be incorporated into the Improvements which are not substantially in
accordance with the Plans and Specifications or which are purchased
pursuant to any conditional sales contract or other security agreement so
that the ownership thereof will not vest unconditionally in Borrower, free
from encumbrances (other than the Permitted Encumbrances); or (3) the
failure of Borrower to furnish to Lender upon written request the
contracts, bills of sale, statements, receipted vouchers and agreements
under which Borrower claims title to such materials, fixtures or articles.
(f) Insufficient Funds. A reasonable determination by Lender that
the estimated cost to complete the construction of the Improvements, to pay
projected interest accruals on the Loan for the remainder of the
Construction Phase (as shown on
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the Budget) and to pay the items described in Section 6.7 of this Agreement
is in excess of the amount of funds available to Borrower from the
undisbursed Loan proceeds to complete and pay for such construction,
interest and items. However, no Event of Default shall be declared by
Lender if such deficiency is corrected, within fifteen (15) days after
written notice to Borrower, by the deposit with Lender of such amount as
may be required, when added to the undisbursed proceeds of the Loan, to
enable Borrower to complete and pay for the costs of construction,
projected interest during the Construction Phase, and the items described
in Section 6.7 of this Agreement.
(g) Cancellation of Insurance. The cancellation of any of the
insurance coverage required by Sections 4.1(i), 4.1(j) and 4.1(k) of this
Agreement, if replacement insurance satisfactory to Lender is not obtained
prior to the effective date of cancellation.
(h) Unauthorized Development of Property. Borrower, prior to
repayment of the Loan, and without Lender's prior written consent,
constructs, causes or permits to be constructed on the Property any
improvements other than those contemplated by this Agreement.
(i) Litigation. The institution of any litigation or
administrative proceeding involving Borrower, this Agreement, the Note, the
Deed of Trust, any of the other Loan Documents, the Property, or the
Improvements which has or may have a materially adverse effect: (1) on the
ability of Borrower to perform any of the obligations under this Agreement
or any of the Loan Documents; (2) on the ability of Borrower to operate and
use the Improvements, or any part thereof for the purposes
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intended; or (3) on the value of the Property or the Improvements as
security for the Note; unless such proceedings shall have been terminated,
dismissed or bonded against to Lender's reasonable satisfaction within
forty-five (45) days after the commencement thereof.
(j) Disclosure of Subcontractors. The failure by Borrower within a
reasonable time after demand therefor by Lender to disclose to Lender the
names of all subcontractors, persons, firms and corporations with whom
Borrower has contracted or intends to contract for the construction of the
Improvements or the furnishing of labor or materials. The failure of
Borrower to exhibit to Lender upon request, copies of all such contracts.
(k) Bankruptcy or Reorganization. The occurrence and continuance
of any of the following with respect to the Borrower or the Guarantor: (1)
the filing by any of them of a petition in bankruptcy or for reorganization
or for an arrangement under any bankruptcy or insolvency law or for a
receiver or trustee for any of their respective properties; (2) the filing
against any of them of a petition in bankruptcy or for reorganization or
for an arrangement under any bankruptcy or insolvency law or for a receiver
or trustee for any of their respective properties which is not dismissed
within sixty (60) days; (3) the appointment of a receiver or trustee of any
of their respective properties which is not discharged within sixty (60)
days; (4) an assignment by any of them for the benefit of creditors or an
admission by any of them, in writing, of an inability to pay their
respective debts as they become due; (5) the entry of a judgment of
insolvency against any of them by any state or federal court of competent
jurisdiction;
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or (6) the attachment or execution by levy against any substantial portion
of any of their respective properties which is not discharged within sixty
(60) days.
(l) Misrepresentation. Any representation or warranty made by
Borrower in connection with an application for the Loan, or in this
Agreement or any of the Loan Documents is or proves to have been materially
incorrect when made.
(m) Default of Covenants. The occurrence and continuance of a
material default by Borrower under any material term, covenant or condition
contained in this Agreement or any of the Loan Documents, or by Guarantor
under the Guaranty, including, without limitation, a failure by Borrower to
pay to Lender any sum when due.
(n) Cross Default. A material default by Borrower under any
material term, covenant or condition of this Agreement, the Deed of Trust,
the Note, any other Loan Document, or any other agreement or arrangement
between Lender and Borrower or Lender and the Guarantor, including, without
limitation: (1) the line of credit facility extended by Lender to the
Guarantor in the maximum principal amount of FIVE MILLION DOLLARS
($5,000,000.00), and any subsequent modifications thereto; and (2) any
other credit facilities between Borrower and Lender or the Guarantor and
Lender now existing or entered into hereafter, shall constitute a default
under this Agreement and all the Loan Documents.
7.2 Notice. If any Event of Default shall occur during the Construction
Phase (whether or not any required notice has been given or an applicable grace
period has elapsed), Lender, pursuant to Section 6.5(a) of this Agreement, shall
not be obligated to make any further disbursements of the Loan proceeds until
such Event of Default is remedied. Unless otherwise
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expressly provided by the terms of this Agreement, or the other Loan Documents,
if an Event of Default shall occur, Lender shall give written notice of such
occurrence to Borrower as follows:
(a) Monetary Default. Borrower shall not be entitled to any notice
regarding defaults with respect to regularly scheduled monthly payments of
principal and accrued interest under the Note. However, in the event of any
other monetary default, Borrower shall have fifteen (15) days following
receipt of written notice from Lender in which to cure such default.
(b) Nonmonetary Default. In the event of a nonmonetary default,
Borrower shall have fifteen (15) days after receipt of written notice from
Lender specifying the nonmonetary default in which to effect a cure.
However, if the nonmonetary default cannot reasonably be corrected within
such fifteen (15) day period, Borrower shall have an additional thirty (30)
days to remedy such nonmonetary default if Borrower notifies Lender of the
manner in which the nonmonetary default shall be cured, and if appropriate
corrective action is instituted within the initial fifteen (15) day period
and is diligently pursued thereafter.
7.3 Remedies. If an Event of Default shall occur and continue after any
required notice and lapse of any applicable grace period, all obligations of
Lender under this Agreement (including the obligation to disburse Loan proceeds
if the Event of Default occurs during the Construction Phase), and under the
Loan Documents, at the election of Lender, shall cease and terminate, and Lender
may: (a) declare the Principal Indebtedness evidenced by the Note and secured by
the Deed of Trust and any other Loan Document immediately due and
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payable; (b) exercise the power of sale provision contained in the Deed of
Trust; (c) foreclose the Deed of Trust as a mortgage; (d) exercise Lender's
rights with respect to any other collateral given as security for the repayment
of the Loan; (e) require that Guarantor perform the obligations of Borrower
under all Loan Documents; or (f) exercise any other right or remedy available to
Lender pursuant to any Loan Document, or as provided at law or in equity.
7.4 Completion by Lender. Upon the occurrence and continuance of a
Event of Default during the Construction Phase, Lender, at Lender's election,
may complete the construction of the Improvements in accordance with the
following:
(a) Continuation of Project. Upon default on the part of Borrower
and after the expiration of any applicable notice or grace period
hereunder, Lender, but without obligation, in addition to any other
remedies which Lender may have under the Loan Documents or by statute or
rule of law, may enter upon the Property and may construct, equip, and
complete the construction of the Improvements on the Property in accordance
with the Plans and Specifications or make such reasonable changes thereto
as Lender may from time to time, in Lender's sole discretion, deem
appropriate, all at the risk, cost and expense of Borrower. Lender shall
have the right at any and all times to discontinue any work commenced by
Lender in respect to the Improvements or to change any course of action
undertaken by Lender and shall not be bound by any limitations or
requirements of time whether set forth herein or otherwise. Lender shall
have the right and power to take over and use all or any part or parts of
the labor, materials, supplies and equipment contracted by or on behalf of
Borrower, including such equipment contracted for by or on behalf of
Borrower, including such equipment
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and supplies that have previously been delivered to the Property or stored
in any facility for incorporation into the Improvements, all in the sole
and absolute discretion of Lender.
(b) Rights of Lender in Completion. In connection with the
completion of the construction of the Improvements undertaken by Lender
pursuant to the provisions of this Section 7.4, Lender may: (1) engage
builders, contractors, architects, engineers and others for the purpose of
furnishing labor, materials, equipment and professional services in
connection with the construction of the Improvements; (2) pay, settle or
compromise all bills or claims which may become liens against the Property
and the Improvements, or which have been or may be incurred in any manner
in connection with the construction, completion and equipment of the
Improvements or for the discharge of liens, encumbrances or defects in the
title to the Property or the Improvements; (3) use all or any portion of
the undisbursed Loan proceeds; (4) take such action as Lender may determine
to protect the Improvements or the supplies delivered for incorporation
into the Improvements; and (5) charge a reasonable fee for services
rendered in connection with any of the foregoing.
(c) Liability of Borrower. Borrower shall be liable to Lender for
all sums paid or incurred by Lender for the completion of constructing and
equipping the Improvements, whether the same shall be paid or incurred
pursuant to provisions of this Section 7.4 or otherwise. All payments made
or liabilities incurred by Lender of any kind whatsoever, including
reasonable attorney fees and costs, shall be paid by Borrower to Lender
upon demand, with interest from the date expended or incurred at the
Default
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<PAGE>
Interest Rate to the date of payment to Lender. All of the foregoing, to
the extent there are insufficient undisbursed Loan proceeds to cover such
payments or liabilities, including without limitation, interest, shall be
deemed and shall constitute Additional Advances becoming part of the
Principal Indebtedness.
(d) Attorney-in-Fact. For purposes of this Section 7.4, Borrower
hereby irrevocably constitutes and appoints Lender as Borrower's true and
lawful attorney-in-fact, coupled with an interest, to execute, acknowledge
and deliver any instruments and to do and perform any act referred to in
this Section 7.4 all in the name and on behalf of Borrower.
7.5 No Remedy Exclusive. No remedy conferred upon or reserved to Lender
under this Agreement shall be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement, the Loan Documents,
or now or hereafter existing at law or in equity or by statute. No delay or
failure to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient.
ARTICLE VIII
ADDITIONAL ADVANCES
In the event Lender, in Lender's sole discretion, and pursuant to the
provisions of this Agreement, but without obligation, makes Additional Advances
to or for the account of Borrower, the sums so advanced, together with interest
thereon at the same rate as provided in
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the Note, shall be deemed added to the Principal Indebtedness of the Loan on the
same terms as set forth in the Note and shall be secured by the Loan Documents.
ARTICLE IX
MISCELLANEOUS
9.1 Non-Waiver. No disbursement of the proceeds of the Loan shall
constitute a waiver of any covenant or condition to be performed by Borrower. In
the event Borrower is unable to satisfy any such covenant or condition, Lender
shall not be precluded from thereafter declaring such failure to be an Event of
Default.
9.2 Derivative Rights. Any obligation of Lender to make disbursements
hereunder is imposed solely and exclusively for the benefit of Borrower and no
other person, firm or corporation shall, under any circumstances, be deemed to
be a beneficiary of such condition, nor shall it have any derivative claim or
action against Lender.
9.3 Amendments. Neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated orally and may only be modified or
amended by an instrument in writing, signed by both Lender and Borrower.
9.4 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of Borrower, Lender and their respective successors and
assigns.
9.5 Waivers. The failure by Lender or Borrower at any time or times
hereafter to require strict performance by the other of any of the undertakings,
agreements or covenants contained in this Agreement shall not waive, affect or
diminish any right of Borrower or Lender hereunder to demand strict compliance
and performance therewith. Any waiver by Lender of any Event of Default under
this Agreement shall not waive or affect any other Event
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of Default hereunder, whether such Event of Default is prior or subsequent
thereto and whether of the same or a different type. None of the undertakings,
agreements or covenants of Borrower and Lender under this Agreement shall be
deemed to have been waived unless such waiver is evidenced by an instrument in
writing signed by the party to be charged specifying such waiver.
9.6 Survival. This Agreement shall survive the recordation of the Deed
of Trust and the disbursement of the Loan proceeds, and each and every one of
the obligations and undertakings of Borrower and Lender contained herein shall
be continuing obligations and undertakings and shall not cease and terminate
until all amounts which may accrue pursuant to this Agreement or any of the Loan
Documents shall have been fully paid and all obligations and undertakings of
Borrower shall have been fully discharged.
9.7 Assignment. Lender may assign Lender's rights under the Loan
Documents, in whole or in part, to any other person, firm or corporation,
provided that all provisions of this Agreement shall continue to apply in
conjunction with the Loan Documents and provided further that Lender shall
remain obligated for the disbursement of Loan proceeds as provided in this
Agreement unless Lender's assignee expressly assumes such obligation and such
assignee is reasonably acceptable to Borrower. In the event of such assignment
by Lender, it shall be deemed to have been made in pursuance of this Agreement
and not to be a modification hereof, and the disbursements and advances
thereafter made shall be evidenced by the Loan Documents.
9.8 Sign. During the Construction Phase, Lender shall be permitted to
erect and maintain at and on the Property, a sign indicating the source of the
construction financing.
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9.9 Notices. Except as otherwise provided herein, all notices shall be
in writing and shall be deemed to have been sufficiently given or served when
presented personally or on the fifth day following the day on which the same is
deposited in the United States mail, by registered or certified mail, postage
prepaid, addressed as follows:
If to Lender, to: U.S. Bank of Utah
107 South Main Street
Salt Lake City, Utah 84111
Attn: Ms. Pauline Vosburgh
Corporate Banking
If to Borrower, to: Dick Simon Trucking, Inc.
4646 South 500 West
Salt Lake City, Utah 84123
Attn: Mr. Alban B. Lang, Chief Financial Officer,
Treasurer and Secretary
Such addresses may be changed by notice to the other party given in the same
manner as above provided.
9.10 Indemnification. Borrower shall save, hold and keep Lender
harmless from any and all loss and damage, costs and expenses, incurred by
reason of, or in consequence of, the noncompletion of the Improvements, or as a
result of Borrower's failure to repair or reconstruct the Improvements in the
event of damage or destruction, except for negligent or wilful acts of Lender.
9.11 Severability. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be void,
voidable or unenforce- able, such void, voidable or unenforceable term or
provision shall not affect any other term or provision of this Agreement.
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9.12 Actions. Lender all have the right, but not the obligation, to
commence, appear in and defend any action or proceeding which might affect
Lender's security or Lender's rights, duties or liabilities relating to the
Loan, the Property, the Improvements or this Agreement.
9.13 Participation. Lender shall have the right to sell participations
in the Loan to any other persons or entities without the consent of or notice to
Borrower, provided that no such action by Lender shall relieve Lender of
Lender's obligation to make disbursements of the Loan proceeds as and when
required by this Agreement. Lender may disclose to any participants or
prospective participants any information or other data or material in Lender's
possession relating to Borrower, the Loan and the Improvements, without the
consent of or prior notice to Borrower.
9.14 No Partnership. Nothing contained in this Agreement or in any Loan
Document shall be construed as creating a joint venture or partnership between
Borrower and Lender. There shall be no sharing of losses, costs and expenses
between Borrower and Lender, and Lender shall have no right of control or
supervision except as Lender may exercise Lender's rights and remedies provided
hereunder and in the Loan Documents.
9.15 Interpretation. Whenever the context shall require, the plural
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The article and section headings
contained in this Agreement are for purposes of reference only and shall not
limit, expand or otherwise affect the construction of any provisions hereof.
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9.16 Governing Law. This Agreement and all matters relating hereto
shall be governed by, construed and interpreted in accordance with the laws of
the State of Utah.
9.17 Conflicts. The provisions of this Agreement are not intended to be
superseded by the provisions of the Deed of Trust executed in conjunction with
this Agreement but shall be construed as supplemental thereto. In the event of
any inconsistency between the provisions hereof and the Deed of Trust, it is
intended that this Agreement shall control.
9.18 Commissions. No brokerage, finder's or other fee, commission or
compensation shall be paid by Borrower or Lender in connection with the closing
of the Loan. Borrower or Lender shall indemnify each other (including attorney
fees and costs) against any and all claims for brokerage and finder's fees or
commissions which may be asserted against the other based on the actions or
omissions of the indemnifying party.
9.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
9.20 Attorney Fees. Borrower and Lender agree that should either of
them default in any of the covenants or agreement contained in this Agreement,
the defaulting party shall pay all costs and expenses, including reasonable
attorney fees and costs, incurred by the non-defaulting party to protect its
rights hereunder, regardless of whether an action is commenced or prosecuted to
judgment. In addition, Borrower hereby consents to the jurisdiction of the
courts of the State of Utah and to venue in Salt Lake County, Utah as proper
forum and venue for resolution of disputes under this Agreement.
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DATED effective as of the date first above written.
LENDER:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/ Pauline Vosburgh
--------------------
PAULINE VOSBURGH, Vice President
BORROWER:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon, President
-------------------------------
RICHARD D. SIMON, President
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EXHIBIT "A"
APPLICATION FOR DISBURSEMENTS
<PAGE>
EXHIBIT "B"
PERMITTED ENCUMBRANCES
1. Taxes for the year 1996 now a lien, not yet due. Tax ID No.
14-24-201-003-0000.
2. Said property is included within the boundaries of Granger-Hunter
Improvement District, for the purpose of supplying water and sewage
facilities to said District.
3. Said property is included within the incorporated city limits of West
Valley City, a municipal corporation of the State of Utah, and is subject
to any special assessments for improvements or services as may be therein
provided.
4. That certain Survey prepared by AAA Engineering & Drafting, dated April 26,
1996, Job No. SGP 2378, which discloses, among other things:
(a) The encroachment of a wire fence on to the southeast corner of the
Property;
(b) A power line over the northerly portion of the Property;
(c) Proposed 2400 South Street along the South line of the Property;
(d) A sewer line across the Property; and
(e) An electric conduit across the Property.
<PAGE>
EXHIBIT "C"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
C-2
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WHEN RECORDED, RETURN TO:
Dan W. Egan, Esq.
SUITTER AXLAND & HANSON
175 South West Temple, Suite 700
Salt Lake City, Utah 84101-1480
DEED OF TRUST
AND
SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Deed of Trust") is made
and entered into effective as of the 23rd day of May, 1996, by and among DICK
SIMON TRUCKING, INC., a Utah corporation ("Trustor"), in favor of FIRST AMERICAN
TITLE COMPANY OF UTAH, a Utah corporation ("Trustee"), for the benefit of U.S.
BANK OF UTAH, a Utah state banking corporation ("Beneficiary").
R E C I T A L S:
A. Trustor is the owner of certain real property located in Salt Lake
County, Utah, as more particularly described on Exhibit "A" attached to and
incorporated by reference in this Deed of Trust (the "Property").
B. Trustor has requested Beneficiary to make a loan in the principal amount
of TEN MILLION DOLLARS ($10,000,000.00), the proceeds of which are to be used by
Trustor to construct on the Property a truck terminal and office complex,
parking and other related facilities and improvements.
C. Beneficiary has committed to make the loan to Trustor, provided that
Beneficiary obtains a first position deed of trust lien and encumbrance on the
Property.
<PAGE>
NOW, THEREFORE, upon the terms, covenants and conditions set forth in
this Deed of Trust, and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, TRUSTOR HEREBY CONVEYS
AND WARRANTS TO TRUSTEE, IN TRUST, WITH POWER OF SALE, and hereby grants to
Beneficiary, as a secured party, a security interest in the following described
real and personal property:
GRANTING CLAUSE I: REAL PROPERTY
All right, title, interest and estate of Trustor in and to the Property
(as defined in Section 1.12 of this Deed of Trust).
GRANTING CLAUSE II:
BUILDINGS, IMPROVEMENTS AND INTERESTS
All right, title, interest and estate of Trustor now owned or hereafter
acquired, in and to:
(1) All buildings, improvements, renovations, works, structures,
facilities and fixtures, including any future additions to, and
improvements and betterments upon, and all renewals and replacements of,
any of the foregoing, which are now or hereafter shall be constructed or
affixed or constructively affixed to the Property, or to any portion of the
Property; and
(2) All easements, licenses, streets, ways, alleys, roads,
passages, rights-of-way, waters, watercourses and water rights (whether now
owned or hereafter acquired by Trustor and whether arising by virtue of
land ownership, contract or otherwise), of any kind and nature, relating to
or in any way appurtenant or appertaining to the Property or any portion of
the Property.
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<PAGE>
GRANTING CLAUSE III: PERMITS AND LICENSES
All permits, franchises, privileges, grants, consents, licenses,
authorizations and approvals heretofore or hereafter granted by the United
States, by the State of Utah or by any departments or agencies thereof or any
other governmental or public bodies, agencies or authorities (including, without
limitation, West Valley City and Salt Lake County, Utah) to or for the benefit
of Trustor and utilized in connection with the construction of the improvements
on the Property.
GRANTING CLAUSE IV:
TANGIBLE PERSONAL PROPERTY
All right, title, interest and estate of Trustor, now owned or
hereafter acquired, in and to:
(1) All goods, supplies, furnishings, equipment, machinery and
other tangible personal property acquired by Trustor with loan proceeds or
incorporated into the improvements; and
(2) All parts, accessories and accessions to each and all of the
foregoing and all renewals and replacements thereof.
Notwithstanding the foregoing, for purposes of this Deed of Trust,
Trustor's tangible personal property does not include Trustor's office
equipment, trucks, trailers and other titled vehicles and equipment.
GRANTING CLAUSE V:
TENEMENTS AND HEREDITAMENTS
All right, title, interest and estate of Trustor, now owned or
hereafter acquired, in and to all and singular the tenements, hereditaments,
rights, privileges and appurtenances
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<PAGE>
belonging, relating, or in any way appertaining to any of the Property, or any
portion of the Property, or which shall hereafter in any way belong, relate or
in any way appertain thereto, whether now owned or hereafter acquired, and the
reversion and reversions, remainder and remainders, and estates, rights, titles,
interests, possessions, claims and demands of every nature whatsoever, at law or
in equity, which Trustor may have or may hereafter acquire in and to the
Property or any portion of the Property.
GRANTING CLAUSE VI: AWARDS
All right, title, interest and estate of Trustor in and to:
(1) All awards made for the taking by eminent domain or by any
proceeding or purchase in lieu thereof of the Property or any portion of
the Property or of any improvements now or hereafter situate thereon or any
estate or easement in the Property (including any awards for change of
grade of streets); and
(2) The proceeds of insurance paid on account of partial or total
destruction of the improvements or any portion thereof.
GRANTING CLAUSE VII: RENTS, ISSUES, ETC.
All right, title, interest and estate of Trustor in and to all sale
proceeds, rents, subrents, issues, royalties, income and profits of and from the
Property or any portion of the Property.
ARTICLE I: DEFINITIONS
Unless the context clearly indicates otherwise, certain terms used in
this Deed of Trust shall have the meanings set forth below:
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<PAGE>
1.1 "Access Laws" shall mean, collectively, the Americans with
Disabilities Act of 1990, the Fair Housing Amendments Act of 1988, and any other
federal, state or local laws or ordinances related to disabled access; or any
statute, rule, regulation, ordinance, order of governmental bodies and
regulatory agencies, or order or decree of any court adopted or enacted with
respect thereto, as now existing or hereafter amended or adopted.
1.2 "Event of Default" shall mean the occurrence and continuance of any
one of the events listed in Section 12.1 of this Deed of Trust.
1.3 "Hazardous Materials" shall mean: (a) any asbestos in any form
which is or could become friable; (b) urea formaldehyde foam insulation; (c)
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls in excess of fifty (50) parts per million; or (d)
any other hazardous wastes, toxic substances, or other related materials,
whether in the form of an element, compound, solution, mixture or otherwise. For
purposes of this Deed of Trust, the term "Hazardous Materials" shall include,
but shall not be limited to, substances defined as "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or words of similar import
under any applicable local, state or federal law or under the regulations
adopted or publications promulgated pursuant thereto, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended 42 U.S.C. 6901 et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.;
Chapters 2, 3, 4, 5 and 6 of the Utah Environmental Quality
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<PAGE>
Code, Title 19, Utah Code Annotated (1953), as the same may be amended from time
to time; and in all rules adopted and regulations promulgated pursuant to any of
the foregoing.
1.4 "Impositions" shall mean all real property taxes and assessments,
general and special, and all other taxes, assessments and other governmental,
municipal or other charges or impositions of any kind or nature whatsoever
(including, without limitation, charges and assessments on water or water stocks
used on or with the Property and levies or charges resulting from covenants,
conditions and restrictions affecting the Trust Estate) which are assessed or
imposed upon the Trust Estate, or become due and payable, and which create or
may create a lien upon the Property or any portion of the Property, equipment or
other facility used in the construction, renovation, operation or maintenance of
the Trust Estate.
1.5 "Improvements" shall mean the truck terminal and office complex,
parking and other related facilities and improvements to be constructed by
Trustor on the Property with the proceeds of the Loan.
1.6 "Loan" shall mean the loan to be advanced by Beneficiary to Trustor
in the original principal amount of TEN MILLION DOLLARS ($10,000,000.00).
1.7 "Note" shall mean the Promissory Note, dated the same date as this
Deed of Trust, in the original principal amount of TEN MILLION DOLLARS
($10,000,000.00), executed by Trustor, as maker, in favor of Beneficiary, as
payee.
1.8 "Obligations" shall mean the obligations of Trustor described in
Section 2.1 of this Deed of Trust, the payment and performance of which are
secured by this Deed of Trust.
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<PAGE>
1.9 "Permitted Encumbrances" shall mean those liens, encumbrances and
matters affecting the Property listed on Exhibit "B" attached to and
incorporated by reference in this Deed of Trust.
1.10 "Personalty" shall mean all personal property, fixtures,
equipment, furnishings and other personal property listed in Granting Clauses
III and IV of this Deed of Trust used in the construction of or incorporated
into the Improvements.
1.11 "Prime Rate" shall mean that certain rate of interest regularly
and periodically published or generally announced by the United States National
Bank of Oregon as its "Prime Rate." The Prime Rate is the interest rate which
Beneficiary from time to time establishes as its prime rate and is not
necessarily the lowest rate of interest which Beneficiary collects from any
borrower or class of borrowers.
1.12 "Property" shall mean that certain real property situate in Salt
Lake County, Utah, referred to in Granting Clause I of this Deed of Trust, and
owned by Trustor. The Property is more particularly described on Exhibit "A"
attached to this Deed of Trust.
1.13 "Trust Estate" shall mean all of the items, documents, interests
and properties referred to in Granting Clauses I through VII of this Deed of
Trust.
ARTICLE II: OBLIGATIONS SECURED
2.1 Obligations. This Deed of Trust is given for the purpose of
securing the following Obligations of Trustor:
(a) The payment and performance of each and every obligation of
Trustor, evidenced by the Note, including, without limitation, the payment
of principal of and interest on the Loan.
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(b) The payment and performance of each and every agreement and
obligation of Trustor under this Deed of Trust, and under any other
instrument given to evidence or further secure the payment and performance
of any obligation of Trustor under the Loan.
(c) The payment of all sums expended and advanced by Trustee or
Beneficiary pursuant to the terms of this Deed of Trust, together with
interest thereon as provided in this Deed of Trust and the Note.
2.2 Extensions and Renewals. Any extensions of, renewals of,
modifications of, or additional advances of the Loan, or any of the Obligations
evidenced by the Note, regardless of the extent or subject matter of any such
extension, renewal, modification or additional advance shall be secured by this
Deed of Trust.
ARTICLE III:
REPRESENTATIONS AND WARRANTIES
3.1 Property. Trustor represents and warrants to Beneficiary as
follows:
(a) Except for the Permitted Encumbrances, Trustor is or
simultaneously with the execution of this Deed of Trust will become the
owner of fee simple title in and to the Property;
(b) Trustor possesses all requisite power and authority to execute
and deliver this Deed of Trust;
(c) Except for the Permitted Encumbrances, Trustor shall defend
title to the Property against all claims and demands whatsoever;
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(d) The Property is free and clear of and from any and all liens,
claims, encumbrances, restrictions, encroachments and interests whatsoever,
in favor of any third party, other than the Permitted Encumbrances;
(e) The lien created by this Deed of Trust upon the Property is a
valid and subsisting first position lien against the Trust Estate, subject
only to the Permitted Encumbrances;
(f) Any and all obligations incurred by Trustor in connection with
the acquisition of all or any portion of the Property are current and
without default on the part of Trustor; and
(g) To the best of Trustor's actual knowledge: (1) the Trust
Estate is not in violation of any federal, state or local law, ordinance or
regulation relating to industrial hygiene or to environmental conditions
on, under or about the Trust Estate, including, without limitation, soil
and ground water conditions; (2) there are no Hazardous Materials
constructed, deposited, stored, disposed, placed or located in, on or under
the Trust Estate (except those materials such as petroleum products,
cleaning supplies, detergents and other similar substances as are commonly
utilized in the operation of a truck complex); and (3) Trustor has not
received notice from any federal, state or local agency or department
regarding the noncompliance by Trustor or the Trust Estate with respect to
any federal, state or local law, ordinance or regulation governing the use,
handling, storage, generation, transportation or disposal of Hazardous
Materials or the mere presence of Hazardous Materials on the Property.
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<PAGE>
3.2 Personalty. Trustor represents and warrants to Beneficiary as
follows:
(a) Trustor is the owner, or upon acquisition thereof, will be the
owner of all Personalty used by Trustor in the operation of the Property;
(b) The Personalty is, or upon acquisition of title thereto by
Trustor will be, free and clear of all liens, claims, encumbrances,
restrictions, charges and security interests in favor of any third party
other than the Permitted Encumbrances;
(c) Trustor will not create, permit or suffer to exist, any lien,
claim, encumbrance, restriction, charge or security interest in or to the
Personalty without the prior written consent of Beneficiary; and
(d) Trustor shall defend the Personalty and take such other action
as is necessary to remove any lien, claim, encumbrance, restriction, charge
or security interest in or to the Personalty superior to the security
interest in Beneficiary created hereunder, except the Permitted
Encumbrances.
ARTICLE IV: MAINTENANCE OF TRUST ESTATE
Trustor shall: (a) maintain the Trust Estate at all times in good
condition and repair; (b) not commit any waste of the Trust Estate, or, except
with the prior written permission of Beneficiary, remove, damage, demolish or
structurally alter any building, fixture or other improvement now on the
Property, or to be constructed on the Property hereafter; (c) complete promptly
and in good and workmanlike manner the buildings, fixtures and other
improvements on the Property, or any portion of the Property, which may for any
reason be constructed; (d) restore promptly and in good and workmanlike manner
any building, fixture or other improvement on the Property, or any portion of
the Property, which may for any reason
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<PAGE>
be damaged or destroyed; (e) comply at all times with all laws, ordinances,
regulations, covenants and restrictions in any manner affecting the Trust
Estate; (f) not commit or knowingly permit any act upon the Trust Estate in
violation of law; and (g) do all acts which by reason of the character or use of
the Trust Estate may be reasonably necessary to maintain and care for the same,
the specific enumeration herein not excluding the general.
ARTICLE V: INSURANCE
5.1 Insurance. Trustor or Trustor's general contractor, as applicable,
shall secure and at all times maintain and promptly pay when due all premiums
for the following types of insurance:
(a) During any period of construction, builder's risk extended
coverage insurance against loss or damage by fire, lightning, windstorm,
hail, explosion, riot, civil commotion, motor vehicles, aircraft, smoke,
theft, vandalism, malicious mischief, and other risks from time to time
included under extended coverage policies in an amount not less than one
hundred percent (100%) of the full replacement value of Improvements. All
policies secured and carried in accordance with this Section 5.1(a) shall
contain the "Replacement Cost Endorsement," a lender's loss payable
endorsement 438 BFU naming Lender as loss payee, and shall name Beneficiary
as an additional insured.
(b) During any period of construction, workmen's compensation
insurance against liability arising from claims of workmen with respect to
and during the period of any work on or about the Property.
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<PAGE>
(c) Following any period of construction, insurance against loss
or damage to the Property, the buildings, improvements and fixtures thereon
and all Personalty used in connection with the Property by fire, vandalism,
malicious mischief, and any of the risks covered by insurance of the type
now known as "fire and extended coverage" in an amount not less than One
Hundred Percent (100%) of the full replacement value of the Improvements.
Such insurance policy or policies shall contain the "Replacement Cost
Endorsement," a lender's loss payable endorsement 438 BFU naming Lender as
loss payee, and shall name Beneficiary as an additional insured.
(d) Following any period of construction, boiler and machinery
insurance covering pressure vessels, air tanks, boilers, machinery,
pressure piping, heating, air conditioning, elevator equipment and
escalator equipment, provided the Improvements contain equipment of such
nature, and insurance against loss of occupancy or use arising from any
such breakdown, in such amounts as are reasonably satisfactory to
Beneficiary.
(e) If the Property is located in a special flood hazard area as
identified by the Federal Insurance Administration, federally subsidized
flood insurance covering the risk of damage to the buildings, fixtures, and
other improvements and Personalty located or to be installed upon the
Property caused by flooding in the total amount of the Loan or for the
maximum amount of subsidized insurance available, whichever is less. In
lieu of such flood insurance, Trustor shall submit to Beneficiary evidence
satisfactory to Beneficiary that no part of the Property is, or will be,
within an area designated as a flood hazard area by the Federal Insurance
Administration.
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<PAGE>
(f) Public liability and property damage insurance applicable to
the Trust Estate in the minimum amounts of One Million Dollars
($1,000,000.00) per person and One Million Dollars ($1,000,000.00) per
occurrence for public liability and One Million Dollars ($1,000,000.00) per
occurrence for property damage. Such liability insurance shall be issued by
one or more insurance companies reasonably satisfactory to Beneficiary and
shall name Beneficiary as an additional insured.
(g) Such other insurance and in such amounts as may from time to
time reasonably be required by Beneficiary against the same or other
hazards.
All policies of builder's risk, fire and extended coverage and other casualty
insurance required by the terms of this Deed of Trust shall contain an
endorsement or agreement by the insurer that any loss shall be payable in
accordance with the terms of such policy notwithstanding any act or negligence
of Trustor which might otherwise result in forfeiture of the insurance. The
policies shall provide that the insurer will waive all rights of set-off,
counterclaim or deduction against Trustor.
5.2 Policies and Premiums. All policies of insurance shall be issued by
insurance companies which have a company rating of not less than "A" and a
financial rating of not less than Class VI in "Best's Insurance Reports." All
policies of builder's risk and other casualty insurance shall have included
therein a standard mortgagee protection clause. Trustor shall furnish
Beneficiary with an original policy of all policies of required insurance or an
original certificate of insurance together with a true and correct copy of each
such policy. All such policies shall contain a provision that such policies will
not be cancelled or materially amended or altered, including reduction of
coverage, without at least thirty (30) days prior
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written notice to Beneficiary. If Beneficiary consents to Trustor providing any
of the required insurance through blanket policies carried by Trustor and
covering more than one location, then Trustor shall cause the insurance company
to furnish Beneficiary with an endorsement to such policy which sets forth the
coverage, the limits of liability, the name of the carrier, the policy number,
the expiration date and a statement that the insurance company will not cancel
or materially modify or alter the coverage evidenced by the endorsement without
first affording Beneficiary at least thirty (30) days prior written notice. In
the event Trustor fails to provide, maintain, keep in force or deliver and
furnish to Beneficiary the policies of insurance required by Section 5.1,
Beneficiary may, but without any obligation to do so, procure such insurance for
such risks covering Beneficiary's interest, and Trustor shall pay all premiums
thereon promptly upon demand by Beneficiary. If Trustor fails to pay any premium
after demand by Beneficiary, Beneficiary, at Beneficiary's option, may advance
any sums necessary to maintain and to keep in force such insurance. Any sums so
advanced, together with interest thereon at the same rate as provided for on the
original indebtedness, shall be secured by this Deed of Trust.
5.3 Occurrence and Notice of Casualty. In the event of loss or damage
to the Trust Estate, or any portion of the Trust Estate, Trustor shall
immediately give notice thereof to Beneficiary. Beneficiary may, but without any
obligation to do so, make proof of loss, and each insurance company concerned is
hereby authorized and directed to make payment for such loss directly to
Beneficiary. The insurance proceeds or any part thereof shall be deemed part of
the security for the Obligations and shall be applied to restore or repair the
portion of the Trust Estate damaged, provided that any insurance proceeds not so
applied may be applied by
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<PAGE>
Beneficiary, at Beneficiary's option, to reduce the indebtedness secured by this
Deed of Trust (whether or not then due and payable). Except to the extent that
insurance proceeds are received by Beneficiary and applied to the indebtedness
secured by this Deed of Trust, nothing herein contained shall be deemed to
excuse Trustor from repairing or maintaining the Trust Estate as provided in
Article IV of this Deed of Trust or restoring all damage or destruction to the
Trust Estate, regardless of whether there are insurance proceeds available or
whether any such proceeds are sufficient in amount. The application or release
by Beneficiary of any insurance proceeds shall not cure or waive any default or
notice of default under this Deed of Trust or invalidate any act done pursuant
to such notice.
5.4 Disposition of Policies on Foreclosure. In the event Beneficiary
exercises the power of sale provisions of this Deed of Trust or makes any other
transfer of title or assignment of the Trust Estate in extinguishment in whole
or in part of the Obligations, all right, title and interest of Trustor in and
to the policies of insurance required by Section 5.1 shall inure to the benefit
of and pass to the successor in interest of Trustor or the purchaser or grantee
of the Trust Estate.
ARTICLE VI: INDEMNIFICATION AND OFF-SET
6.1 Indemnification by Trustor. Trustor hereby indemnifies and holds
Beneficiary harmless in accordance with the following:
(a) If Beneficiary is made a party defendant to any litigation
(except litigation wherein Trustor asserts a claim against Beneficiary and
prevails) concerning this Deed of Trust or the Trust Estate or any part of
the Trust Estate or interest therein, or the occupancy thereof by Trustor,
then Trustor shall indemnify, defend and hold
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<PAGE>
Beneficiary harmless from any and all liability by reason of such
litigation, including reasonable attorney fees and costs incurred by
Beneficiary in any such litigation, whether or not the litigation is
prosecuted to judgment. If, following the occurrence and continuance of an
Event of Default, Beneficiary commences an action against Trustor to
enforce any of the material terms, covenants or conditions of this Deed of
Trust or because of the breach by Trustor of any of the material terms,
covenants or conditions, or for the recovery of any sum secured hereby,
Trustor shall pay to Beneficiary reasonable attorney fees and costs in an
amount equal to the amount of such fees and costs actually incurred by
Beneficiary. The right to such attorney fees and costs shall be deemed to
have accrued on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If Trustor breaches
any material term, covenant or condition of this Deed of Trust, Beneficiary
may employ an attorney or attorneys to protect Beneficiary's rights
hereunder and in the event of such employment following any breach by
Trustor, Trustor shall pay Beneficiary reasonable attorney fees and costs
in an amount equal to the amount of such fees and costs actually incurred
by Beneficiary, whether or not action is actually commenced against Trustor
by reason of such breach.
(b) If Beneficiary is held liable or could be held liable for, or
is subject to any losses, damages, costs, charges or expenses, directly or
indirectly on account of any claims for work, labor or materials furnished
in connection with or arising from the construction of any building,
fixture or other Improvement, then
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Trustor shall indemnify, defend and hold Beneficiary harmless from all
liability or expense arising therefrom including reasonable attorney fees
and costs.
(c) Trustor, to the full extent permitted by law, shall indemnify,
defend and hold harmless Beneficiary, Beneficiary's directors, officers,
employees, agents, participants, successors and assigns from and against
any and all loss, cost, expense or liability incurred in connection with
any and all claims and proceedings (whether brought by private party or
governmental agency) for bodily injury, property damage, abatement or
remediation, environmental damage or impairment, or any other injury or
damage resulting from or relating to any Hazardous Materials located under
or upon or migrating into, under, from or through the Property, which
Beneficiary may incur due to the making of the Loan, the exercise of any of
Beneficiary's rights under this Deed of Trust or under any other document
evidencing or securing the Loan, or otherwise. The foregoing indemnity
shall apply: (1) whether or not the release of the Hazardous Materials was
caused by Trustor, a tenant or subtenant of Trustor, or a prior owner or
tenant of the Property; and (2) whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or
disposal of Hazardous Materials or the mere presence of Hazardous Materials
on the Property. The obligations of Trustor under this Section 6.1(c) shall
survive the foreclosure of this Deed of Trust, a conveyance in lieu of
foreclosure, the repayment of the Loan proceeds and the discharge and
release of the lien and encumbrance of this Deed of Trust.
6.2 Off-Set. All sums payable by Trustor under this Deed of Trust shall
(unless otherwise specifically provided in this Deed of Trust) be paid without
notice, demand,
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counterclaim, set-off, deduction or defense and without abatement, suspension,
deferment, diminution or reduction. The Obligations and liabilities of Trustor
hereunder shall in no way be released, discharged or otherwise affected (except
as expressly provided herein) by reason of: (a) any damage to or destruction of,
or any condemnation or similar taking of the Trust Estate or any part thereof;
(b) any restriction or prevention of or interference with any use of the Trust
Estate or any part thereof; (c) any title defect or encumbrance or any eviction
from the Trust Estate or any part thereof by title paramount or otherwise; (d)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Beneficiary, or
any action taken with respect to this Deed of Trust by any trustee or receiver
of Beneficiary, or by any court, in any such proceeding; (e) any claim which
Trustor has or might have against Beneficiary; (f) any default or failure on the
part of Beneficiary to perform or comply with any of the terms, covenants or
conditions of this Deed of Trust or of any other agreement with Trustor; or (g)
any other occurrence whatsoever, whether similar or dissimilar to the foregoing.
ARTICLE VII: IMPOSITIONS
7.1 Payment of Impositions. Subject to Section 7.3 of this Deed of
Trust, Trustor shall pay, prior to delinquency, all Impositions. However, if, by
law, any Imposition is payable, or may at the election of the taxpayer be paid
in installments, Trustor may pay the same together with any accrued interest on
the unpaid balance of such Imposition in installments as the same become due and
before any fine, penalty, interest or cost may be added thereto for the
nonpayment of any such installment and interest.
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7.2 Evidence of Payment. Trustor shall, upon request by Beneficiary,
furnish to Beneficiary, within thirty (30) days after the date upon which such
Imposition is due and payable by Trustor, official receipts of the appropriate
taxing authority, or other proof satisfactory to Beneficiary, evidencing the
payments thereof.
7.3 Right to Contest. Trustor shall have the right, before any date set
for forfeiture, whether at tax sale, foreclosure on a tax lien or otherwise, to
contest or object to the amount or validity of any Imposition by appropriate
legal proceedings, but such contest shall not be deemed or construed in any way
as relieving, modifying or extending Trustor's covenant to pay any such
Imposition at the time and in the manner provided in Section 7.1, unless Trustor
has given prior written notice to Beneficiary of Trustor's intent so to contest
or object to an Imposition, and unless, at Beneficiary's option: (a) Trustor
shall demonstrate to Beneficiary's satisfaction that the legal proceedings shall
conclusively operate to prevent the sale of the Trust Estate, or any part
thereof, to satisfy such Imposition prior to final determination of such
proceedings; or (b) Trustor shall furnish good and sufficient undertaking and
sureties as may be required or permitted by law to accomplish a stay of such
proceedings.
7.4 Tax on Deed of Trust. If at any time after the date hereof there
shall be assessed or imposed: (a) a tax or assessment on the Trust Estate in
lieu of or in addition to the Impositions payable by Trustor; or (b) a license
fee, tax or assessment imposed on Beneficiary and measured by or based in whole
or in part upon the amount of the outstanding Obligations or upon payments on
the Note (whether principal or interest); then all such taxes, assessments and
fees shall be deemed to be included within the term "Impositions" as defined in
Section 1.4 of this Deed of Trust, and Trustor shall pay and discharge the same
as herein provided with
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respect to the payment of Impositions. Trustor shall have no obligation to pay
any franchise, income, excess profits or similar tax levied on Beneficiary or on
the Obligations secured hereby.
7.5 Reserves for Taxes and Insurance. In furtherance of Section 5.1 and
Section 7.1 of this Deed of Trust and anything to the contrary herein
notwithstanding, Trustor, upon request by Beneficiary for reasonable cause
shown, shall pay to Beneficiary, on the date monthly installments of interest
are payable under the Note, until the Note is paid in full, an amount equal to
one-twelfth of the annual Impositions reasonably estimated by Beneficiary to pay
the installment of Impositions next due on the Trust Estate; and one-twelfth of
the annual aggregate insurance premium on all policies of insurance required in
Section 5.1. Upon such request, Trustor shall thereafter cause all bills,
statements or other documents relating to Impositions and insurance premiums to
be sent to Beneficiary. Provided Trustor has deposited sufficient funds with
Beneficiary pursuant to this Section 7.5, Beneficiary shall pay such amounts as
may be due thereunder out of the funds so deposited with Beneficiary. If at any
time and for any reason the funds deposited with Beneficiary pursuant to this
Section 7.5 are or will be insufficient to pay such amounts as may then or
subsequently be due, Beneficiary shall notify Trustor and Trustor shall
immediately deposit an amount equal to such deficiency with Beneficiary. Nothing
contained herein shall cause Beneficiary to be deemed a trustee of such funds or
to be obligated to pay any amounts in excess of the amount of funds deposited
with Beneficiary pursuant to this Section 7.5. Beneficiary shall not be
obligated to pay any interest on any sums held by Beneficiary pending
disbursement or application hereunder, and Beneficiary may impound or reserve
for future payment of Impositions and insurance premiums such
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portion of such payments as Beneficiary, in Beneficiary's absolute discretion,
may deem proper. In the event that upon request from Beneficiary pursuant to
this Section 7.5 Trustor fails to deposit with Beneficiary sums sufficient to
pay fully such Impositions and insurance premiums at least thirty (30) days
before delinquency thereof, Beneficiary, at Beneficiary's election, but without
any obligation to do so, may advance any amounts required to make up the
deficiency, which advances, if any, shall be secured by this Deed of Trust, and
shall be repayable to Beneficiary, with interest from the date advanced, at the
rate of interest specified in the Note.
ARTICLE VIII: ADDITIONAL COVENANTS
8.1 Payment of Utilities. Trustor shall pay when due all utility
charges relating to the Trust Estate which may become a lien or charge against
the Trust Estate or any portion thereof, for gas, electricity, water or sewer
services furnished to the Trust Estate and all assessments or charges of a
similar nature, whether public or private, affecting the Trust Estate or any
portion thereof, whether or not such assessments or charges are liens thereon.
8.2 Defense of Title. Trustor shall appear in and defend any action or
proceeding purporting to affect the security hereof, the Trust Estate, or the
rights or powers of Beneficiary or Trustee. Should Beneficiary elect in good
faith to appear in or defend any such action or proceeding, Trustor shall pay
all costs and expenses, including costs of evidence of title and reasonable
attorney fees and costs, incurred by Beneficiary or Trustee.
8.3 Performance in Trustor's Stead. Should Trustor fail to make any
payment or to do any act as provided in this Deed of Trust, then Beneficiary or
Trustee, but without any obligation to do so, without notice to or demand upon
Trustor and without releasing Trustor from any obligation hereunder, may: (a)
make or do the same in such manner and to such
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extent as either may deem necessary to protect the security hereof (Beneficiary
or Trustee being authorized to enter upon the Trust Estate for such purposes);
(b) commence, appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee; (c) pay,
purchase, contest or compromise any encumbrance, charge or lien which in the
judgment of either Beneficiary or Trustee appears to be superior to the lien of
this Deed of Trust; and (d) in exercising any such powers, incur any liability,
expend such reasonable amounts as Beneficiary may deem necessary therefor,
including cost of evidence of title, employment of attorneys, and payment of
reasonable attorney fees and costs. All such amounts expended by either or both
Trustee or Beneficiary shall, at the election of Beneficiary, be added to the
principal indebtedness secured by this Deed of Trust and shall accrue interest
in accordance with the terms of the Note.
8.4 Repayment of Advances. Trustor shall immediately repay to
Beneficiary all sums, other than Loan proceeds, with interest thereon as
provided in the Note, which at any time may be paid or advanced by Beneficiary
for the payment of insurance premiums, taxes, assessments, other governmental,
municipal, or other charges or Impositions, title searches, title reports or
abstracts, and any other advances made by Beneficiary which are reasonably
necessary to maintain this Deed of Trust as a prior, valid and subsisting lien
upon the Trust Estate, to preserve and protect Beneficiary's interest in this
Deed of Trust, or to preserve, repair or maintain the Trust Estate. All such
advances shall be wholly optional on the part of Beneficiary, and Trustor's
obligation to repay the same, with interest, to Beneficiary shall be secured by
the lien of this Deed of Trust.
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8.5 No Removal of Fixtures. Trustor shall not, during the existence of
this Deed of Trust and without the prior written consent of Beneficiary, remove
from the Property any building, fixture, structure or other improvement at any
time affixed or constructively affixed to the Property or any portion of the
Property, or any Personalty, except in the ordinary course of Trustor's
business.
8.6 Further Assurance. Trustor shall execute and deliver to Beneficiary
such further instruments, including, without limitation, Uniform Commercial Code
Financing Statements and Continuation Statements, and do such further acts as
may be necessary or as may reasonably be required by Beneficiary to carry out
more effectively the purposes of this Deed of Trust and to subject to the lien
and encumbrance created or intended to be created hereby any property, rights or
interests covered or intended to be covered by this Deed of Trust. Trustor
hereby authorizes (to the extent such authorization is valid under applicable
law) Beneficiary to execute and file, without Trustor's signature, such Uniform
Commercial Code Financing Statements and Continuation Statements as Beneficiary
may deem necessary in order to perfect or continue the perfection of the
security interests created by this Deed of Trust.
8.7 No Further Encumbrances. Except for the Permitted Encumbrances and
the liens and encumbrances of this Deed of Trust and financing statements of
even date herewith, executed by Trustor in favor of Beneficiary, Trustor shall
not create, permit or suffer to exist, and, at the responsible Trustor's
expense, will defend the Trust Estate and take such other action as is necessary
to remove any lien, claim, charge, security interest or encumbrance in or to the
Trust Estate, or any portion of the Trust Estate.
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8.8 No Conveyance of Property. Trustor shall not sell, convey or
alienate the Property or any portion thereof, or any interest therein to any
person or entity, without the prior written consent of Beneficiary. In the event
Trustor shall sell, convey or alienate all or any portion of the Property, or
any interest therein, in violation of the foregoing, or be divested of title to
the Property in any manner, whether voluntarily or involuntarily, then the
entire principal indebtedness of the Loan, as evidenced by the Note, and all
other Obligations secured by this Deed of Trust, irrespective of the maturity
date expressed therein, at the option of Beneficiary, and without prior demand
or notice, shall become immediately due and payable.
8.9 Application of Payments. If at any time during the term of this
Deed of Trust Beneficiary receives or obtains a payment, installment or sum
which is less than the entire amount then due under the Note secured by this
Deed of Trust and under all other instruments further evidencing or securing the
Obligations, then Beneficiary shall, notwithstanding any instructions which may
be given by Trustor, have the right to apply such payment, installment or sum,
or any part thereof, to such of the items or Obligations then due from Trustor
or to Beneficiary as Beneficiary, in Beneficiary's sole discretion, may
determine.
8.10 Hazardous Substances. Trustor shall comply with all applicable
federal, state and local laws, regulations, rules and ordinances governing the
handling, storage, generation, transportation and disposal of Hazardous
Materials as the same affect or may affect the operation of Trustor's present
business on or with respect to the Trust Estate. In addition, Trustor shall not
without the prior written consent of Beneficiary undertake any new business
venture or operation on or affecting the Trust Estate which now requires or may
hereafter require compliance with any federal, state or local law, regulation,
rule or ordinance governing
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Hazardous Materials. If requested by Beneficiary from time to time during the
continuance of this Deed of Trust, Trustor shall submit to Beneficiary a report,
in form satisfactory to Beneficiary, certifying that the Trust Estate is not
being used in any regulated activities directly or indirectly involving the use,
handling, storage, generation, transportation and disposal of Hazardous
Materials. Beneficiary reserves the right, in Beneficiary's sole and absolute
discretion, to retain, at Trustor's expense, an independent professional
consultant to review any report prepared by Trustor and to conduct its own
investigation of the Trust Estate. Trustor hereby grants to Beneficiary, its
agents, employees, consultants and contractors, the right to enter upon the
Trust Estate and to perform such tests as are reasonably necessary to conduct
such a review or investigation.
8.11 Access Laws. Trustor makes the following covenants with
Beneficiary with respect to the Access Laws:
(a) Trustor and the Property shall at all times strictly comply
with the requirements of Access Laws. At any time, Beneficiary may require
a certificate of compliance with the Access Laws and indemnification
agreement in a form reasonably acceptable to Beneficiary. Beneficiary may
also require a certificate of compliance from an architect, engineer or
other third party acceptable.
(b) Notwithstanding any provisions set forth herein or in any
security instrument, Trustor shall not alter or permit any tenant or other
person to alter the Property in any manner which would increase Trustor's
responsibilities for compliance with the Access Laws without the prior
written approval of Beneficiary. In connection
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with such approval, Beneficiary may require a certificate of compliance
with the Access Laws from an architect, engineer or other party acceptable
to Beneficiary.
(c) Trustor shall give prompt written notice to Beneficiary of the
receipt by Trustor of any claims of violation of any of the Access Laws and
of the commencement of any proceedings or investigations which relate to
compliance with the Access Laws.
(d) Trustor shall indemnify and hold harmless Beneficiary from and
against any and all claims, demands, damages, costs, expenses, losses,
liabilities, penalties, fines and other proceedings, including, without
limitation, reasonable attorney fees and expenses arising directly or
indirectly from or out of or in any way connected with any failure of the
Property to comply with the Access Laws. The obligations and liabilities of
Trustor under this subsection shall survive any termination, satisfaction,
assignment, judicial or non-judicial foreclosure proceeding, or delivery of
a deed in lieu of foreclosure with respect to this agreement, any security
instrument and the Property.
ARTICLE IX: CONDEMNATION AWARDS
Trustor shall promptly give notice to Beneficiary of any condemnation
proceeding or any taking for public improvements. If the Trust Estate or any
portion thereof should be taken or damaged by reason of any public improvement
or condemnation proceeding, Beneficiary shall be entitled: (1) to receive all
compensation, awards and other payments or relief for such taking or
condemnation; (2) at Beneficiary's option and in Beneficiary's own name, to
commence, appear in and prosecute in Beneficiary's own name any action or
proceeding relating to such taking or condemnation; and (3) to make any
compromise or settlement in
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connection with any such taking or condemnation. All such compensation, awards,
damages, causes of action, proceeds or other payments shall be deemed part of
the security for the Obligations and are hereby assigned to Beneficiary.
Beneficiary, after deducting therefrom all costs and expenses (regardless of the
particular nature thereof and whether incurred with or without suit or before or
after judgment), including reasonable attorney fees incurred by Beneficiary in
connection with such compensation, shall apply any and all moneys so received by
Beneficiary to restore or repair damage to the remaining Trust Estate, provided
that any proceeds not so applied may be applied by Beneficiary, at Beneficiary's
option, to reduce the indebtedness secured by this Deed of Trust (whether or not
then due). The application or release by Beneficiary of any condemnation awards
or other compensation shall not cure or waive any default or notice of default
under this Deed of Trust or invalidate any act done pursuant to such notice.
Subject to the foregoing, Trustor shall execute and deliver to Beneficiary such
further assignments of such compensation, awards, damages, causes of action,
proceeds or other payments as Beneficiary may from time to time require.
ARTICLE X: ASSIGNMENT OF RENTS AND CONTRACTS
10.1 Assignment. As additional security for the Obligations secured by
this Deed of Trust, Trustor hereby assigns, sells, transfers and conveys to
Beneficiary during the continuance of this Deed of Trust, all contracts, leases,
subleases and agreements relating to the sale, lease, sublease or use of any
portion of the Trust Estate or the Property, together with all sales proceeds,
rents, subrents, issues, royalties, income and profits of and from the Trust
Estate. Until the occurrence of an Event of Default, Trustor may collect and use
all such sales proceeds, rents, subrents, issues, royalties, income and profits
and may retain, use and enjoy
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the Trust Estate as they become due and payable. Upon the occurrence and
continuance of an Event of Default hereunder, Trustor's right to collect and use
any of such proceeds shall cease, and Beneficiary shall have the right, with or
without taking possession of the Trust Estate, and either in person, by agent or
through a court appointed receiver (Trustor hereby consents to the appointment
of Beneficiary or Beneficiary's designee as such receiver), to sue for or
otherwise collect all such sales proceeds, rents, subrents, issues, royalties,
income and profits, including those past due and unpaid. Any sums so collected,
after the deduction of all costs and expenses of operation and collection
(regardless of the particular nature thereof and whether incurred with or
without suit or before or after judgment), including reasonable attorney fees,
shall be applied toward the payment of the Obligations. Such right of collection
and use of such proceeds by Beneficiary shall obtain both before and after the
exercise of the power of sale provisions of this Deed of Trust, the foreclosure
of this Deed of Trust and throughout any period of redemption. The rights
granted under this Section 10.1 shall in no way be dependent upon and shall
apply without regard to whether all or a portion of the Trust Estate is in
danger of being lost, removed or materially injured, or whether the Trust Estate
or any other security is adequate to discharge the Obligations secured by this
Deed of Trust. Beneficiary's failure or discontinuance at any time to collect
any of such proceeds shall not in any manner affect the right, power and
authority of Beneficiary thereafter to collect the same. Nothing contained
herein, nor Beneficiary's exercise of Beneficiary's right to collect such
proceeds, shall be, or be construed to be, an affirmation by Beneficiary of any
contractual interest, tenancy, lease, sublease, option or other interest in the
Trust Estate, or an assumption of liability under, or a subordination of the
lien or charge of this Deed of Trust to any contractual interest, tenancy,
lease, sublease,
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option or other interest in the Trust Estate. All purchasers, tenants, lessees,
sublessees and other persons who have any obligation to make any payment to
Trustor in connection with the Trust Estate or any portion thereof are hereby
authorized and directed to pay the rents, subrents, issues, royalties, income,
profits and other payments payable by them with respect to the Trust Estate, or
any portion thereof, directly to Beneficiary on the demand of Beneficiary.
Beneficiary's receipt of such sales proceeds, rents, subrents, issues,
royalties, income and profits shall be a good and sufficient discharge of the
obligation of the purchaser, tenant, lessee, sublessee or other person concerned
to make the payment connected with the amount so received by Beneficiary.
10.2 No Waiver of Rights by Collection of Proceeds. The entering upon
and taking possession of the Trust Estate or any portion of the Trust Estate or
the collection of sale proceeds, rents, subrents, issues, royalties, income,
profits, proceeds of fire and other insurance policies, or compensation or
awards for any taking or damaging of the Trust Estate, or the application or
release thereof as aforesaid, shall not cure or waive any Event of Default or
notice of default hereunder, shall not invalidate any act done pursuant to such
notice of default, and shall not operate to postpone or suspend the obligation
to make, or have the effect of altering the size of, any scheduled installments
provided for in any of the Obligations secured by this Deed of Trust.
10.3 Indemnification. Trustor shall indemnify and hold Beneficiary
harmless from and against all claims, demands, judgments, liabilities, actions,
costs and fees (including reasonable attorney fees and costs) arising from or
related to receipt by Beneficiary of the sale
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proceeds, rents, subrents, issues, royalties, income and profits from the Trust
Estate or any portion of the Trust Estate, except negligent or willful acts of
Beneficiary.
ARTICLE XI: ASSIGNMENT OF UTILITY TAPS
Trustor hereby assigns to Beneficiary all right, title and interest of
Trustor in and to any and all contracts, agreements or commitments between
Trustor and any utility company, water company or user association, or telephone
company, to furnish electricity, natural gas or oil, telephone, sewer, water or
other such services, or to provide hook-ups, connections, lines or other
necessary taps to the Property and the buildings, fixtures and other
Improvements constructed and to be constructed thereon. Such assignment shall
become effective immediately upon the occurrence of an Event of Default. Trustor
hereby irrevocably appoints Beneficiary as Trustor's true and lawful
attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver
any instruments and to do and perform any act in the name and on behalf of
Trustor necessary to maintain and continue all contracts, agreements or
commitments with any such utility company and, otherwise, to perform all acts
necessary to assure uninterrupted utility service to the Property, the
buildings, fixtures and other Improvements constructed and to be constructed
thereon.
ARTICLE XII: EVENTS OF DEFAULT AND REMEDIES
12.1 Events of Default. The occurrence and continuance of any one of
the following shall constitute an Event of Default under this Deed of Trust:
(a) Failure by Trustor to observe and perform any term, covenant
or condition to be observed or performed by Trustor contained in this Deed
of Trust, the Note or any other instrument or document evidencing or
securing the Loan.
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(b) Any representation or warranty of Trustor contained in this
Deed of Trust, the Note or any other instrument or document evidencing or
securing the Loan was untrue when made.
(c) A default by Trustor under the terms of any other promissory
note, deed of trust, security agreement, undertaking or arrangement between
Trustor and Beneficiary now in existence or hereafter arising.
12.2 Notice. Unless otherwise expressly provided by the terms of this
Deed of Trust or any other applicable instrument or document, if an Event of
Default shall occur, Beneficiary shall give written notice of such occurrence to
Trustor as follows:
(a) Trustor shall not be entitled to any notice regarding defaults
with respect to regularly scheduled payments of principal and accrued
interest under the Note. However, in the event of any other monetary
default, Trustor shall have fifteen (15) days following receipt of written
notice from Beneficiary in which to cure such default.
(b) In the event of a nonmonetary default, Trustor shall have
fifteen (15) days after receipt of written notice from Beneficiary
specifying the nonmonetary default in which to effect a cure. However, if
the nonmonetary default cannot reasonably be corrected within such fifteen
(15) day period, Trustor shall have an additional thirty (30) days to
remedy such nonmonetary default if Trustor notifies Beneficiary of the
manner in which the nonmonetary default shall be cured and if appropriate
corrective action is instituted within the initial fifteen (15) day period
and is diligently pursued thereafter.
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12.3 Division of Trust Estate. Upon the occurrence and continuance of
an Event of Default and if there are Hazardous Materials then present on the
Property, Beneficiary, at Beneficiary's election and without any obligation to
do so, may divide the Trust Estate into any number of parcels to facilitate the
sale of the Trust Estate at a foreclosure sale. In connection therewith,
Beneficiary may: (a) enter upon the Trust Estate and conduct or cause to be
conducted inspections and surveys of the Trust Estate; (b) divide the Trust
Estate in such manner as to segregate any Hazardous Materials into one or more
distinct parcels; and (c) elect to sell at foreclosure sale only those portions
of the Trust Estate that are not contaminated by or do not contain Hazardous
Materials. Trustor hereby consents to such division and sale of the Trust
Estate.
12.4 Acceleration; Notice. Upon the occurrence and continuance of an
Event of Default, Beneficiary shall have the option, in addition to any other
remedy Beneficiary may have under the Note, to declare by notice to Trustor all
sums secured by this Deed of Trust immediately due and payable and elect to have
the Trust Estate sold in the manner provided herein. In the event Beneficiary
elects to sell the Trust Estate, Beneficiary shall execute or cause Trustee to
execute a written notice of default and election to cause the Trust Estate to be
sold to satisfy the Obligations. Such notice shall be filed for record in Salt
Lake County, Utah.
12.5 Exercise of Power of Sale. After the lapse of such time as may
then be required by law following the recordation of the notice of default, and
notice of default and notice of sale having been given as then required by law,
Trustee, without demand on Trustor, except as provided by law, shall sell the
Trust Estate on the date and at the time and place designated in the notice of
sale, either as a whole or in separate parcels, and in such order as
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Beneficiary may determine (but subject to any statutory right of Trustor to
direct the order in which the Property, if consisting of several known lots or
parcels, shall be sold), at public auction to the highest bidder, the purchase
price payable in lawful money of the United States at the time of sale. The
person conducting the sale may, for any cause deemed expedient, postpone the
sale from time to time until it shall be completed. In every such case, notice
or postponement shall be given by public declaration thereof by such person at
the time and place last appointed for the sale; provided, if the sale is
postponed for longer than seventy-two (72) hours beyond the day designated in
the notice of sale, notice of the time, date and place of sale shall be given in
the same manner as the original notice of sale. Trustee shall execute and
deliver to the purchaser a Trustee's Deed conveying the property so sold, but
without any covenant or warranty, expressed or implied. The recitals in the
Trustee's Deed of any matters or facts relating to the exercise of the power of
sale and the sale of the Trust Estate shall be conclusive proof of the
truthfulness thereof. Any person, including Beneficiary, may bid at the sale.
Trustee shall apply the proceeds of the sale to payment of: (a) the costs and
expenses of exercising the power of sale and of the sale, including the payment
of the Trustee's fees and attorney fees and costs; (b) all sums expended or
advanced by Beneficiary in conjunction with any provisions of this Deed of
Trust, not then repaid, with accrued interest thereon from the date of
expenditure, at a floating rate of interest calculated by adding to the amount
of the Prime Rate, five percent (5.0%), per annum; (c) all sums then secured by
this Deed of Trust, including interest and principal on the Note; and (d) the
remainder, if any, to the person or persons legally entitled thereto, or
Trustee, in Trustee's discretion, may deposit the balance of such proceeds with
the County Clerk of Salt Lake County, Utah.
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12.6 UCC Remedies. Beneficiary, with regard to the security interest in
all Personalty granted to Beneficiary under the Granting Clauses of this Deed of
Trust, shall have the right to exercise, from time to time, any and all rights
and remedies available to Beneficiary, as a secured party under the Uniform
Commercial Code of Utah, and any and all rights and remedies available to
Beneficiary under any other applicable law. Upon written demand from
Beneficiary, Trustor shall, at Trustor's expense, assemble the Personalty and
make the Personalty available to Beneficiary at the Property.
12.7 Foreclosure as a Mortgage. If an Event of Default occurs and
continues hereunder, Beneficiary shall have the option to foreclose this Deed of
Trust in the manner provided by law for the foreclosure of mortgages on real
property and Beneficiary shall be entitled to recover in such proceedings all
costs and expenses incident thereto, including reasonable attorney fees and
costs, in such amounts as shall be fixed by the court.
12.8 Receiver. If an Event of Default occurs and continues,
Beneficiary, as a matter of right and without regard to the then value of the
Trust Estate or the interest of Trustor therein, shall have the right upon
notice to Trustor to apply to any court having jurisdiction over the subject
matter to appoint a receiver or receivers of the Trust Estate. Any such receiver
or receivers shall have all the usual powers and duties of a receiver and shall
continue as such and may exercise all such powers until completion of the sale
of the Trust Estate or the foreclosure proceeding, unless the receivership is
sooner terminated.
12.9 No Remedy Exclusive. No remedy conferred upon or reserved to
Beneficiary under this Deed of Trust shall be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every
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other remedy given under this Deed of Trust or the Note, or now or hereafter
existing at law or in equity or by statute. No delay or failure to exercise any
right or power accruing upon any Event of Default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient.
12.10 Cross Default. The occurrence and continuance of an Event of
Default under this Deed of Trust, the Note or any other agreement or arrangement
between Trustor and Beneficiary now existing or entered into hereafter shall
constitute a default under all such documents, including, without limitation,
this Deed of Trust and the Note as well as any other such agreement or
arrangement.
ARTICLE XIII: MISCELLANEOUS PROVISIONS
13.1 Notices. Except as otherwise provided herein, all notices shall be
in writing and shall be deemed to have been sufficiently given or served when
presented personally or on the fifth day following the day on which the same is
deposited in the United States Mail, by registered or certified mail, postage
prepaid, addressed as follows:
If to Trustor, to: Dick Simon Trucking, Inc.
4646 South 500 West
Salt Lake City, Utah 84123
Attn: Mr. Alban B. Lang, Chief Financial
Officer, Treasurer and Secretary
If to Beneficiary, to: U.S. Bank of Utah
107 South Main Street
Salt Lake City, Utah 84111
Attn: Ms. Pauline Vosburgh
Corporate Banking
If to Trustee, to: First American Title Company of Utah
330 East Fourth South
Salt Lake City, Utah 84111
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Such addresses may be changed by notice to the other parties in the same manner
as above provided.
13.2 Severability. If any provision of this Deed of Trust shall be held
or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions contained in this Deed
of Trust or render the same invalid, inoperative or unenforceable to any extent
whatsoever.
13.3 Amendments, Changes and Modifications. This Deed of Trust may not
be amended, changed, modified, altered or terminated without the prior written
consent of both Beneficiary and Trustor.
13.4 Governing Law. This Deed of Trust shall be governed exclusively
by and construed in accordance with the applicable laws of the State of Utah.
13.5 Interpretation. Whenever the context shall require, the plural
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The article and section headings
contained in this Deed of Trust are for purposes of reference only and shall not
limit, expand or otherwise affect the construction of any provisions hereof.
13.6 Binding Effect. This Deed of Trust shall be binding upon shall
inure to the benefit of the respective successors and assigns of Beneficiary and
Trustor.
13.7 Waivers. Beneficiary's failure at any time or times hereafter to
require strict performance by Trustor of any of the undertakings, agreements or
covenants contained in this Deed of Trust shall not waive, affect or diminish
any right of Beneficiary hereunder to demand strict compliance and performance
therewith. Any waiver by Beneficiary of any Event of Default under this Deed of
Trust shall not waive or affect any other Event of Default
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hereunder, whether such Event of Default is prior or subsequent thereto and
whether of the same or a different type. None of the undertakings, agreements or
covenants of Trustor under this Deed of Trust shall be deemed to have been
waived by Beneficiary, unless such waiver is evidenced by an instrument in
writing signed by an officer of Beneficiary and directed to Trustor specifying
such waiver.
13.8 Access. Beneficiary, or Beneficiary's authorized agents and
representatives, is hereby authorized and shall have the right, at all
reasonable times during the existence of this Deed of Trust and without prior
written notice to Trustor, to enter upon the Trust Estate or any portion of the
Trust Estate for the purpose of inspecting the Trust Estate or for the purpose
of performing any of the acts that Beneficiary is authorized under this Deed of
Trust to perform.
13.9 Attorney Fees. Beneficiary and Trustor agree that should either of
them default in any of the covenants or agreements contained herein, the
defaulting party shall pay all costs and expenses, including reasonable attorney
fees, incurred by the non-defaulting party to protect its rights hereunder,
regardless of whether an action is commenced or prosecuted to judgment.
13.10 Successor Trustee. Beneficiary may appoint a successor trustee at
any time by filing for record in the office of the County Recorder of each
county in which the Trust Estate or some part thereof is situated a substitution
of trustee. From the time the substitution is filed of record, the new Trustee
shall succeed to all the powers, duties, authority and title of the Trustee
named herein or of any successor trustee. Each such substitution shall be
executed and acknowledged, and notice thereof shall be given and proof thereof
made in the manner provided by law.
- 37 -
<PAGE>
13.11 Acceptance of Trust. Trustee accepts this Trust when this Deed of
Trust, duly executed and acknowledged, is made a public record as provided by
law. Trustee is not obligated to notify any party hereto of pending sale under
any other deed of trust or any action or proceeding in which Trustor,
Beneficiary, or Trustee shall be party, unless brought by Trustee.
13.12 Request for Notice of Default. Trustor requests that a copy of
any notice of default and of any notice of sale hereunder be mailed to Trustor
at the address set forth in Section 13.1 of this Deed of Trust.
13.13 Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
DATED effective as of the date first above written.
TRUSTOR:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/Richard D. Simon, President
------------------------------
RICHARD D. SIMON, President
BENEFICIARY:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/ Pauline Vosburgh
------------------------------
PAULINE VOSBURGH, Vice President
- 38 -
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 23rd day of
May, 1996, by RICHARD D. SIMON, who is the President of DICK SIMON TRUCKING,
INC., a Utah corporation.
/s/ Alban B. Lang
------------------------------------------
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
April 20, 1999
- - ---------------------
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 23rd day of
May, 1996, by PAULINE VOSBURGH, who is a Vice President of U.S. BANK OF UTAH, a
Utah state banking corporation.
/s/ Alban B. Lang
------------------------------------------
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
April 20, 1999
- - ---------------------
99\96\trus041296.dee
- 39 -
<PAGE>
EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base
<PAGE>
and Meridian (said point lies on an East line of the property conveyed to
RICHARD D. SIMON in the certain Special Warranty Deed recorded June 14,
1994, as Entry No. 5849753, in Book 6961, at page 1889 of the official
records); and running thence North 89(degree)49'59" East 330.87 feet along
a North line of said RICHARD D. SIMON property; thence South
0(degree)05'04" West 263.31 feet along the East of said RICHARD D. SIMON
property; thence South 89(degree)49'59" West 330.93 feet; thence North
0(degree)05'53" East 263.31 feet to the point of beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
EXHIBIT "B"
PERMITTED ENCUMBRANCES
1. Taxes for the year 1996 now a lien, not yet due. Tax ID No.
14-24-201-003-0000.
2. Said property is included within the boundaries of Granger-Hunter
Improvement District, for the purpose of supplying water and sewage
facilities to said District.
3. Said property is included within the incorporated city limits of West
Valley City, a municipal corporation of the State of Utah, and is subject
to any special assessments for improvements or services as may be therein
provided.
4. That certain Survey prepared by AAA Engineering & Drafting, dated April 26,
1996, Job No. SGP 2378, which discloses, among other things:
(a) The encroachment of a wire fence on to the southeast corner of the
Property;
(b) A power line over the northerly portion of the Property;
(c) Proposed 2400 South Street along the South line of the Property;
(d) A sewer line across the Property; and
(e) An electric conduit across the Property.
<PAGE>
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into effective as of the
23rd day of May 1996, by SIMON TRANSPORTATION SERVICES INC., a Nevada
corpoaration ("Guarantor"), to and for the benefit of U.S. BANK OF UTAH, a Utah
state banking corporation, its assigns and participants ("Lender").
R E C I T A L S:
A. Dick Simon Trucking, Inc., a Utah corporation ("Borrower"), has
requested that Lender make a loan (the "Loan"), in the principal amount of TEN
MILLION DOLLARS ($10,000,000.00), the proceeds of which are to be used by
Borrower to construct a truck terminal and office complex, together with
appurtenant parking and related facilities and improvements (the "Improvements")
on that certain real property owned by Borrower located in Salt Lake County,
Utah, more particularly described on Exhibit "A" attached to and incorporated by
reference in this Guaranty (the "Property").
B. The Loan is to be evidenced and secured by the following instruments
and documents to be entered into between Borrower and Lender: a Loan Agreement
(the "Loan Agreement"), a Promissory Note in the original principal amount
of the Loan (the "Note"), a Deed of Trust and Security Agreement (the "Deed of
Trust"), Assignments of Plans and Specifications and Rights Under Architectural
Contract, an Assignment of Construction Contract, a Security Agreement and
Uniform Commercial Code Financing Statements (all such documents are hereinafter
collectively referred to as the "Loan Documents").
<PAGE>
C. Lender requires, as a condition precedent to making the Loan, that
Guarantor guarantee the payment of all principal, interest and other charges,
costs and fees provided for in the Note and the other Loan Documents, and the
performance by Borrower of all terms, covenants and conditions to be performed,
satisfied and observed by Borrower under the provisions of the Loan Documents.
D. Lender has committed to fund the Loan based in part upon the execution
of this Guaranty and Borrower and Guarantor have accepted the terms and
conditions of the Loan set forth in the Loan Documents.
NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower,
and in consideration of other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally and absolutely
guarantees the following (collectively the "Obligations"):
(a) The payment and performance of each and every covenant,
condition and obligation of Borrower under the Note, the Deed of Trust and
the other Loan Documents;
(b) The payment of all disbursements, advances, debts, obligations
and liabilities relating to the Loan, now or hereafter made, incurred or
created, whether voluntarily or involuntarily, or however arising, whether
due or not due, by acceleration or otherwise, whether absolute or
contingent, liquidated or unliquidated, which are owed by Borrower to
Lender pursuant to any of the Loan Documents;
- 2 -
<PAGE>
(c) The payment of all fees, charges, expenses, reasonable
attorney fees and costs of court chargeable to Borrower or incurred by
Lender under this Guaranty or any of the Loan Documents;
(d) Any deficiency amount resulting from the foreclosure or other
sale of the Property or other property securing the Loan; and
(e) Any and all extensions, amendments, modifications or renewals
of any of the foregoing.
2. Satisfaction by Guarantor. In the event any of the Obligations are
not satisfied when due, Guarantor, upon demand by Lender, shall forthwith
satisfy such Obligations or, if the maturity thereof shall have been accelerated
by Lender, Guarantor will forthwith satisfy all Obligations of Borrower. No such
satisfaction shall discharge the liability of Guarantor until all Obligations
have been satisfied in full. In addition, Guarantor shall pay to Lender, upon
demand, all losses, reasonable costs and expenses, including, without
limitation, attorney fees and court costs, incurred by Lender in attempts to
satisfy the Obligations or the liability of Guarantor under this Guaranty.
3. Consent of Guarantor. Guarantor hereby authorizes Lender, without
notice or demand and without affecting Guarantor's liability hereunder, from
time to time, to:
(a) Renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the Obligations or
any part thereof, including, without limitation, the increase or decrease
of the rate or amount of Obligations and the exchange, enforcement, waiver
and release of any security therefor;
- 3 -
<PAGE>
(b) Apply to the Obligations any security underlying the
Obligations and direct the order or manner of sale thereof as Lender in
Lender's discretion may determine;
(c) Release or substitute any endorser or Guarantor without
affecting the obligations of any remaining Guarantor;
(d) Assign this Guaranty in whole or in part;
(e) Exchange, release or surrender to Borrower or to Guarantor, or
to any pledgor or grantor any collateral for the Obligations, or waive,
release or subordinate any security interest, in whole or in part, now or
hereafter held by Lender as security for any of the Obligations;
(f) Waive or delay the exercise of any of Lender's rights or
remedies arising out of or pertaining to the Loan against Borrower,
Guarantor or any other person or entity;
(g) Take or omit to take any action or enforce any right, power or
remedy referred to or conferred by this Guaranty or any of the Loan
Documents; and
(h) Apply payments by Borrower, Guarantor or any other person or
entity to any of the Obligations.
4. Waivers by Guarantor. Guarantor hereby waives:
(a) Any legal or equitable rights to require Lender to proceed
against Borrower, proceed against or exhaust any security for the
Obligations or pursue any other remedy Lender may have against Borrower;
- 4 -
<PAGE>
(b) Any defense arising out of the absence, impairment or loss of
any right of reimbursement or subrogation or other right or remedy of
Guarantor against Borrower or any security for the Loan;
(c) Any right of subrogation Guarantor may have against Borrower
and the enforcement of any remedy which Lender now has or may hereafter
acquire against Borrower;
(d) Any benefit of, and any right to participate in, any security
for the Obligations now or hereafter held by Lender; and
(e) All notices of presentment, demand, protest and notice of
nonperformance or nonpayment, and any other demands and notices required by
law, except as such waiver may be expressly prohibited by law.
5. Insolvency of Borrower. If now or hereafter: (a) Borrower becomes
insolvent; or (b) the Obligations are not fully secured by collateral pledged by
Borrower to Lender, Guarantor hereby forever waives and relinquishes in favor of
Lender and Borrower and their respective successors, any claim or right to
payment Guarantor may now or may hereafter have or acquire against Borrower by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. Section 547(b), or any
successor provision of the Federal bankruptcy laws. In the event of insolvency
and subsequent liquidation of the assets of Borrower, through bankruptcy, by
assignment for the benefit of creditors, by voluntary liquidation or otherwise,
the assets of Borrower applicable to the payment of the claims of both Lender
and Guarantor shall be paid to Lender and shall be first applied by Lender to
the Obligations. Guarantor shall indemnify Lender from any
- 5 -
<PAGE>
preference liability as well as the costs of defending a preference suit in a
bankruptcy case involving Borrower. Guarantor hereby waives any right of
indemnity, reimbursement, contribution or subrogation from Borrower.
6. Absolute Guaranty. The obligations of Guarantor under this Guaranty
are absolute and unconditional and are independent of the Obligations of
Borrower and any other guarantor of the Obligations. A separate action or
actions may be brought and prosecuted against Guarantor, whether action is
brought against Borrower or any such other guarantor or whether Borrower or any
such other guarantor is joined in any such action or actions. The liability of
Guarantor to Lender shall not in any manner be affected by any action taken or
not taken by Lender, nor by the partial or complete unenforceability or
invalidity of any other guaranty, surety agreement, pledge, assignment or other
security for any of the Obligations.
7. Subordination of Borrower's Indebtedness to Guarantor. Any
indebtedness of Borrower now or hereafter owed to or held by Guarantor is hereby
subordinated to the Obligations of Borrower owed and to be owed to Lender. Any
such indebtedness of Borrower to Guarantor, if Lender so requests, shall be
collected, enforced and received by Guarantor as trustee for Lender and shall be
paid over to Lender on account of the Obligations of Borrower to Lender, but
without reducing or affecting in any manner the liability of Guarantor under the
provisions of this Guaranty.
8. Accuracy of Financial Statements. Guarantor recognizes that
Lender's commitment to fund the Loan on the basis of the execution of this
Guaranty was based in material part on Lender's analysis of Guarantor's
financial statements submitted to Lender in
- 6 -
<PAGE>
connection with Borrower's application for the Loan. With respect to such
financial statements, Guarantor hereby states, represents, warrants, covenants
and agrees as follows:
(a) The financial statements are complete and accurate, properly
discloses all assets and liabilities with respect to which Guarantor has an
interest or is obligated, and were prepared in accordance with generally
accepted accounting principles.
(b) Except as expressly disclosed in the financial statements, no
other person or entity has any interest in or lien or security interest
upon or in any of the assets listed therein.
(c) Between the date of the financial statements and the date of
this Guaranty, there has been no material change in the financial condition
of Guarantor as set forth in the financial statements, and Guarantor
continues to own all of the assets in the manner described in the financial
statements.
9. Financial Reporting. Guarantor shall furnish to Lender the
following financial statements prepared in accordance with generally accepted
accounting principles:
(a) As soon as available and in any event within one hundred
twenty days (120) days after the end of each fiscal year of Guarantor,
Guarantor shall deliver to Lender an audited fiscal year-end balance sheet,
cash flow statement and income statement for Guarnator's preceding fiscal
year, together with the Form 10-K pertaining to Guarantor filed with the
Securities and Exchange Commission for such period; and
(b) As soon as available and in any event within sixty (60) days
after the end of each fiscal quarter, Guarantor shall submit to Lender a
company prepared balance sheet, cash flow statement and income statement
for such quarter showing year-to-date performance, together with the Form
10-Q pertaining to Guarantor filed with the Securities and Exchange
Commission for such period.
10. Guarantor's Line of Credit. Guarantor has obtained from Lender a
revolving line of credit (the "Line of Credit") which has a current credit
limit of FIVE MILLION DOLLARS ($5,000,000.00) Until construction of all of
the Improvements is substantially completed, as evidenced by one or more
certificates of occupancy, Guarantor shall reserve the sum of TWO MILLION
DOLLARS ($2,000,000.00) from the Line of Credit to cover any cost overruns
or, as disbursements of Loan proceeds are made under the terms of the Loan
Agreement, to make up the difference between the then estimated cost to
complete the construction of the Improvements and the amount of the then
undisbursed Loan proceeds. Guarantor shall not request, and Lender shall
not be obligated to fund, any advance request made by Guarantor under the
Line of Credit which would have the effect of reducing the available credit
under the Line of Credit below the minimum sum of TWO MILLION DOLLARS
($2,000,000.00). The provisions of this paragraph 10 shall apply to the
existing Line of Credit and to any modifications to, or replacements or
transformations of the Line of Credit and the documentation evidencing or
securing the same.
11. Borrower's Agents. Lender shall have no obligation to inquire
into the powers and authority of Borrower or the agents acting or purporting to
act on Borrower's
- 7 -
<PAGE>
behalf, and any Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
12. Attorney Fees. Guarantor shall pay reasonable attorney fees and
all other reasonable costs and expenses which may be incurred by Lender in the
enforcement of this Guaranty.
13. Joint and Several Liability. In the event this Guaranty is executed
by more than one person, all such persons shall be jointly and severally liable
for all liabilities and obligations created pursuant to this Guaranty. Any
modifications of the terms of payment or extension of time of payments under the
Note of any of the other Loan Documents shall in no way impair their joint and
several liability.
14. Amendments. Neither this Guaranty nor any provisions hereof may
be changed, waived, discharged or terminated orally and may only be modified or
amended by an instrument in writing, signed by both Lender and Guarantor.
15. Binding Effect. This Guaranty shall be binding, jointly and
severally, upon Guarantor, and the successors and assigns of Guarantor. This
Guaranty shall inure to the benefit of Lender, and Lender's successors and
assigns.
16. Waivers by Lender. Lender's failure at any time or times hereafter
to require strict performance by Borrower of any of the undertakings, agreements
or covenants contained in the Loan Documents, or by Guarantor of any of the
undertaking, agreements or covenants contained in this Guaranty, shall not
waive, affect or diminish any right of Lender to demand strict compliance and
performance therewith. None of the undertakings, agreements or covenants of
Guarantor under this Guaranty shall be deemed to have been waived by Lender,
- 8 -
<PAGE>
unless such waiver is evidenced by an instrument in writing signed by an officer
of Lender and directed to Guarantor specifying such waiver.
17. Survival. This Guaranty shall survive the disbursement of the Loan
proceeds, and each and every one of the obligations and undertakings of
Guarantor contained herein shall be continuing obligations and undertakings and
shall not cease and terminate until all of the Obligations shall have been fully
paid, performed and discharged.
18. Assignment. Lender may assign Lender's rights under this
Guaranty, in whole or in part, to any other person, firm or corporation.
19. Notices. Except as otherwise provided herein, all notices shall be
in writing and shall be deemed to have been sufficiently given or served when
presented personally or on the fifth day following the day on which the same is
deposited in the United States mail, by registered or certified mail, postage
prepaid, addressed as follows:
If to Lender, to: U.S. Bank of Utah
107 South Main Street
Salt Lake City, Utah 84111
Attn: Mr. Robert M. Bowen
Commercial Real Estate Division
If to Guarantor, to: Simon Transportation Services Inc.
4646 South 500 West
Salt Lake City, Utah 84123
Attn: Mr. Richard D. Simon, Chairman,
President and Chief Executive Officer
Such addresses may be changed by notice to the other party or parties given in
the same manner as above provided.
20. Severability. If any term or provision of this Guaranty shall, to
any extent, be determined by a court of competent jurisdiction to be void,
voidable or unenforce-
- 9 -
<PAGE>
able, such void, voidable or unenforceable term or provision shall not affect
any other term or provision of this Guaranty.
21. Interpretation. Whenever the context shall require, the plural
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The paragraph headings contained in
this Guaranty are for purposes of reference only and shall not limit, expand or
otherwise affect the construction of any provisions hereof.
22. Governing Law. This Guaranty and all matters relating hereto
shall be governed by, construed and interpreted in accordance with the laws of
the State of Utah.
23. Remedies Cumulative. All of Lender's rights and remedies under this
Guaranty shall be cumulative. Any failure of Lender to exercise any right or
remedy under this Guaranty or under any of the Loan Documents shall not be
construed as a waiver of the right to exercise the same or any other right or
remedy at any time and from time to time, thereafter.
DATED effective as of the date first above written.
GUARANTOR:
SIMON TRANSPORTATION SERVICES INC., a
Nevada corporation
By: /s/ Richard D. Simon, CEO & President
-------------------------------------
RICHARD D. SIMON, Chairman, President
and Chief Executive Officer
- 10 -
<PAGE>
EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), is made and entered into
effective as of the 23rd day of May, 1996, by and between DICK SIMON TRUCKING,
INC., a Utah corporation ("Debtor"), and U.S. BANK OF UTAH, a Utah state banking
corporation ("Secured Party").
R E C I T A L S:
A. Debtor has applied to Secured Party for a loan (the "Loan") in the
principal amount of TEN MILLION DOLLARS ($10,000,000.00), the proceeds of which
are to be used to construct a truck terminal and office complex, and related
parking and other facilities and improvements on certain real property owned by
Debtor and located in Salt Lake County, Utah.
B. Secured Party has committed to make the Loan, conditioned in part, upon
the security provided in this Agreement.
NOW, THEREFORE, in consideration of Secured Party making the Loan to
Debtor, and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Secured Party and Debtor agree as
follows:
ARTICLE I
DEFINITIONS
Unless the context clearly indicates otherwise, certain terms used in
this Agreement shall have the meanings set forth below. To the extent not
defined in this Article I, unless the context otherwise requires, all other
terms contained in this Agreement shall have the meanings attributed to them in
the Utah Uniform Commercial Code, Chapter 9, Title 70A, Utah Code Annotated
(1953), as amended, to the extent the same are used or defined therein.
<PAGE>
1.1 "Collateral" means: (a) all Equipment; (b) all building materials,
supplies and inventories; and (c) all ledger sheets, files, records, documents
and instruments, including, without limitation, computer programs, tapes and
related electronic data processing software, evidencing an interest in or
relating to the Collateral.
1.2 "Deed of Trust" means the Deed of Trust and Security Agreement,
dated the same date as this Agreement, executed by Debtor, as trustor, in favor
of Secured Party, as beneficiary, encumbering the Property as partial security
for the Obligations.
1.3 "Equipment" means: (a) all machinery, equipment, appliances, floor
coverings, furnishings, window coverings and fixtures of Debtor now owned or
hereafter acquired by Debtor, and used or acquired for use on the Property,
together with all accessions thereto and all substitutions and replacements
thereof and all parts therefor; and (b) all cash or noncash proceeds from any of
the foregoing, including, without limitation, insurance proceeds. However,
Equipment does not include Debtor's office equipment, trucks, trailers and other
titled vehicles and equipment.
1.4 "Event of Default" means the occurrence and continuance of any of
the events specified in Section 6.1 of this Agreement.
1.5 "Improvements" means the truck terminal and office complex Borrower
intends to construct on the Property with proceeds of the Loan, together with
parking and other related facilities and improvements.
1.6 "Loan Agreement" means the Loan Agreement, dated the same date as
this Agreement, between Secured Party, as lender, and Debtor, as borrower,
pursuant to which Lender agrees to advance the Loan to Borrower for the
construction of the Improvements.
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<PAGE>
1.7 "Loan Documents" means this Agreement, the Loan Agreement, the Deed
of Trust, the Note, the Guaranty executed by a principal of Debtor in favor of
Secured Party, Uniform Commercial Code Financing Statements and all other
documents evidencing or securing the Loan.
1.8 "Note" means the Promissory Note, dated the same date as this
Agreement, in the original principal amount of TEN MILLION DOLLARS
($10,000,000.00), executed by Debtor, as maker, in favor of Secured Party, as
payee, to evidence Debtor's obligations under the Loan.
1.9 "Obligations" means: (a) all indebtedness, obligations and
liabilities of Debtor to Secured Party of every kind and description, arising
out of or in any manner connected with the Loan, as evidenced and secured by any
of the Loan Documents, whether direct or indirect, secured or unsecured, joint
or several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising, regardless of how the same arise
or by what instrument, agreement or account they may be evidenced, or whether
evidenced by any instrument, agreement or account, including, without
limitation, all loans (including any loan by renewal or extension); and (b) all
interest, taxes, fees, charges, expenses and attorney fees chargeable to Debtor
or incurred by Secured Party under this Agreement or any of the Loan Documents.
1.10 "Property" means the real property owned or being acquired by
Borrower located in Salt Lake County, Utah, as more particularly described on
Exhibit "A" attached to and incorporated by reference in this Agreement.
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ARTICLE II
GRANT OF SECURITY INTEREST
Debtor hereby pledges, assigns and transfers to Secured Party, and
grants to Secured Party, a continuing security interest in and to all of the
Collateral, to secure the payment and performance of the Obligations and each
and every obligation, liability and undertaking of Debtor under the Loan
Documents, together with all subsequent advances made, expenditures authorized
and additional payments provided for in the Loan Documents.
ARTICLE III
GENERAL REPRESENTATIONS AND WARRANTIES
Debtor hereby represents and warrants to Secured Party as follows:
3.1 Ownership, Authority. Except as otherwise disclosed to Secured
Party in writing prior to the date of this Agreement, Debtor is, or upon
acquisition thereof shall become, the owner of the Collateral. Debtor possesses
all requisite power and authority to execute and deliver this Agreement and to
grant to Secured Party a valid security interest in the Collateral as provided
in this Agreement.
3.2 No Other Security Interests. Except as otherwise disclosed to
Secured Party in writing prior to the date of this Agreement, no financing
statement covering the Collateral, or any portion thereof, has been filed with
any filing officer, and the Collateral is free from any adverse liens, security
interests, claims or encumbrances of any kind.
3.3 Tradenames, Name Changes, Mergers. Except as previously disclosed
to Secured Party in writing, Debtor utilizes no tradenames in the conduct of
Debtor's business, has not changed its name, been the surviving entity in a
merger, or acquired all or substantially all of the assets of any other
business.
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3.4 No Conflicting Agreement. Debtor is not a party to any contract or
agreement or subject to any legal restrictions of any kind which materially and
adversely affect the business, properties, assets or condition, financial or
otherwise, of Debtor, and neither the execution and delivery of any of the Loan
Documents by Debtor, nor the compliance by Debtor with the terms, covenants and
conditions of the Loan Documents will conflict with, or result in a breach of,
or a default under, any agreement or other instrument to which Debtor is bound
or, except as provided in the Loan Documents, result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon the
Collateral.
3.5 Defaults and Violations. Debtor is not in default or in violation
with respect to any final judgment, writ, injunction, decree or regulation of
any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
has jurisdiction over Debtor or the property of Debtor.
3.6 Financial Statements. Any and all financial statements previously
delivered to Secured Party by Debtor have been prepared in accordance with
generally accepted accounting principles consistently applied with respect to
all prior periods and, except as may be disclosed in the notes thereto,
accurately represent the financial condition of Debtor and reflect accurately
the assets and properties of Debtor and the results of operation of Debtor as of
the dates thereof. No material adverse change has occurred in the financial
condition of Debtor as reflected in the financial statements since the dates
thereof.
3.7 Taxes and Assessments. All taxes, assessments and other
governmental charges upon Debtor and upon Debtor's properties, assets or income
and upon the Collateral have been paid and shall continue to be paid as they
become due and payable.
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3.8 Pending Litigation. Except as described in Section 2.1 of the Loan
Agreement, there is no action, suit or proceeding pending, including, without
limitation, condemnation proceedings, or to the best of Debtor's knowledge,
threatened against or affecting Debtor or the Collateral, in any court of law or
equity, or before any governmental or quasi-governmental instrumentality,
whether federal, state, county or municipal, which may result in any material
adverse change in the business prospects, profits or condition of Debtor.
3.9 Loan Documents Binding. This Agreement and the other Loan Documents
have been duly authorized, executed, acknowledged and delivered, as appropriate,
by Debtor. This Agreement and the other Loan Documents constitute valid and
legally binding obligations of Debtor.
3.10 No Misrepresentations or Omissions. No representation, warranty or
statement by Debtor contained in this Agreement or in any of the other Loan
Documents contains, or at the time of delivery shall contain, any untrue
statement of material fact, or omits, or shall omit at the time of delivery, to
state a material fact necessary to make it not misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS WITH RESPECT TO EQUIPMENT
4.1 Location of Equipment. The Equipment is or shall be in possession
of Debtor and kept or maintained at or upon the Property. Debtor shall notify
Secured Party no later than fifteen (15) days prior to any change of location
where the Equipment is or shall be kept.
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4.2 Maintenance of Equipment. Debtor shall keep and maintain all
Equipment in good operating condition and repair, make all necessary repairs
thereto and replacement of parts thereof so that the value and operating
efficiency of the Equipment shall at all times be maintained and preserved;
subject, however, to ordinary wear and tear. In addition, Debtor shall keep
complete and accurate books and records with respect to the Equipment,
including, without limitation, maintenance records.
4.3 Evidence of Title. Debtor shall deliver to Secured Party any and
all evidence of title to any and all of the Equipment.
4.4 Sale or Other Disposition of Equipment. Debtor shall not, without
the prior written consent of Secured Party, sell, offer to sell, lease or in any
other manner dispose of any of the Equipment, except for those items which are
disposed of or become obsolete in the ordinary course of business and which will
be replaced after such disposal or obsolescence.
ARTICLE V
GENERAL COVENANTS
5.1 No Further Encumbrances. Debtor shall not further mortgage, pledge,
grant or permit to exist a security interest in, or lien or encumbrance on, any
of the Collateral, without the prior written consent of Secured Party.
5.2 Insurance. Debtor shall, at Debtor's sole cost and expense,
maintain casualty insurance coverage on the Collateral upon the terms and with
the limits of coverage set forth in the Deed of Trust. All rights, duties and
obligations of Debtor and Secured Party with respect to insurance coverage of
the Collateral, including, without limitation, payment of
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premiums, use of proceeds and disposition of policies upon foreclosure, shall be
governed by the terms of the Deed of Trust.
5.3 Right to Inspect. Debtor shall permit Secured Party, through
Secured Party's authorized attorneys, accountants and representatives, at all
reasonable times, to inspect and examine the Collateral and the books, accounts,
records and ledgers of every kind and description of Debtor pertaining to the
Collateral.
5.4 Notice to Secured Party. Debtor shall promptly notify Secured
Party in writing of any of the following:
(a) The existence or occurrence of any condition or event which
constitutes, or would constitute with the passage of time, the giving of
notice or both, an Event of Default under this Agreement;
(b) Any events or changes in the financial condition of Debtor
occurring since the date of the last financial statement of Debtor
delivered to Secured Party, which individually or cumulatively when viewed
in light of prior financial statements, may result in a material adverse
change in the financial condition of Debtor; and
(c) Any claim, action or proceeding materially affecting title to
the Collateral or any part thereof, or the security interest herein granted
to Secured Party.
5.5 Payment of Obligations and Preservation of Rights. Debtor shall pay
the Obligations, and all principal, interest, costs, expenses and other sums
associated therewith, as and when they become due. In addition, Debtor shall
take all necessary steps to preserve rights against all parties with respect to
all of the Collateral. In the event Debtor fails to make any
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payments required or which Secured Party reasonably deems advisable to protect,
maintain or preserve the Collateral, or Secured Party's security interest
therein, Secured Party may, but shall not be obligated to, advance funds for the
same. Any such advances, including, without limitation, reasonable attorney fees
and costs incurred by Secured Party, shall be part of the Obligations and shall
be immediately payable with interest thereon from the date advanced by Secured
Party at the then current rate under the Note, if the Loan is not otherwise in
default. After a default under the Loan, interest shall accrue on any such
advance at the default rate of interest specified in the Note.
5.6 Payment of Taxes and Assessments. Debtor shall pay or deposit
promptly when due all sales, use, excise, personal property, income,
withholding, franchise and other taxes, assessments and governmental charges
upon or relating to Debtor's ownership or use of any of the Collateral, and
shall, upon demand by Secured Party, submit to Secured Party evidence
satisfactory to Secured Party that such payments or deposits have been made.
5.7 Further Assurances. Debtor shall at any time and from time to time
upon request of Secured Party, execute and deliver to Secured Party, in form and
substance satisfactory to Secured Party, such documents as Secured Party shall
deem necessary to perfect or maintain perfected the security interest of Secured
Party in the Collateral, or which may be necessary to comply with the provisions
of the law of the State of Utah or the law of any other jurisdiction in which
Debtor may then be conducting Debtor's business or in which any of the
Collateral may be located.
5.8 Licenses and Permits. Debtor shall keep in effect all licenses,
permits and franchises required by law or contract relating to Debtor's
business, property or the Collateral, and shall pay when due all fees and other
charges pertaining thereto.
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5.9 Waste and Misuse. Debtor shall not waste or destroy the Collateral
or any part thereof or any document or record evidencing the same. In addition,
Debtor shall not misuse, cancel or in any way use or dispose of any of the
Collateral unlawfully or contrary to the provisions of this Agreement.
5.10 Management Agreement. Debtor shall not enter into any management
agreement relating to the Improvements, without the prior consent of Secured
Party, which consent shall not be unreasonably withheld. In addition, except in
the ordinary course of business of operating the Improvements, Debtor shall not
enter into any rental agreements with respect to the Improvements without the
prior consent of Secured Party, which consent shall not be unreasonably
withheld.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence and continuance of any of the
following shall constitute an Event of Default under this Agreement:
(a) The failure of Debtor to pay when due any principal, interest
or other charge in respect to any of the Obligations.
(b) A default by Debtor in the observance or performance of any
covenant or agreement set forth in this Agreement or any of the other Loan
Documents.
(c) Except in the ordinary course of business, any material
deterioration or impairment of any of the Collateral or any material
decline or depreciation in the market value thereof (other than such
deterioration, impairment, decline or depreciation as is caused by normal
use or the passage of time) which, in the reasonable judgment of
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Secured Party, causes the value or character of the Collateral to become
substantially insufficient as security for the Obligations.
(d) Any warranty, representation or statement made in this
Agreement or made or furnished to Secured Party by or on behalf of Debtor
in connection with this Agreement or to induce Secured Party to make the
Loan to Debtor proves to be or to have been false in any material respect
when made or furnished; or any financial statement, record or other
information provided by Debtor which has been, or may in the future be,
furnished to Secured Party by or on behalf of Debtor shall prove to be
false in any material respect.
(e) The filing of any material lien, levy or any attachment,
execution or other process against the Property, or against any other
property of Debtor, or against any of the Collateral.
(f) The loss, theft, damage or destruction of any material portion
of the Collateral for which there is either no insurance coverage, or for
which in the reasonable opinion of Secured Party there is insufficient
insurance coverage.
(g) The occurrence and continuance of any of the following with
respect to Debtor or to any guarantor of Debtor's obligations to Secured
Party under the Loan: (1) the filing by any of them of a petition in
bankruptcy or for reorganization or for an arrangement under any bankruptcy
or insolvency law or for a receiver or trustee for any of their respective
properties; (2) the filing against any of them of a petition in bankruptcy
or for reorganization or for an arrangement under any bankruptcy or
insolvency law or for a receiver or trustee for any of their respective
properties which
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is not dismissed within sixty (60) days; (3) the appointment of a receiver
or trustee of any of their respective properties which is not discharged
within sixty (60) days; (4) an assignment by any of them for the benefit of
creditors or an admission by any of them, in writing, of an inability to
pay their respective debts as they become due; (5) the entry of a judgment
of insolvency against any of them by any state or federal court of
competent jurisdiction; or (6) the attachment or execution by levy against
any substantial portion of any of their respective properties which is not
discharged within sixty (60) days.
(h) The transfer by Debtor of any interest in any part of the
Collateral without the prior written consent of Secured Party, except in
the ordinary course of business.
(i) The taking of possession of any substantial part of the
property of Debtor at the instance of any governmental authority.
(j) The entry of a final judgment or ruling in any litigation or
administrative proceeding involving Debtor, this Agreement, the Property or
the Collateral which has or may have a materially adverse affect: (1) on
the ability of Debtor to perform any of the obligations under this
Agreement or any other Loan Document; (2) on the ability of Debtor to
operate and use the Improvements, or any part thereof for the purposes
intended; or (3) on the value of the Property or the Improvements as
security for the Note; unless such judgment or ruling shall have been
vacated, dismissed, reversed or bonded against to Lender's reasonable
satisfaction within forty-five (45) days after the entry thereof.
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(k) The reasonable determination by Secured Party that a material
adverse change has occurred in the financial condition of Debtor or any
guarantor of the Obligations since delivery of the last dated financial
statements to Secured Party.
(l) Any circumstance which, in the reasonable judgment of Secured
Party, impairs the prospect of payment of any of the Obligations in full
when and as they become due, or otherwise causes Secured Party to
reasonably deem itself insecure.
6.2 Notice. Unless otherwise expressly provided by the terms of this
Agreement, or the other Loan Documents, if an Event of Default shall occur,
Secured Party shall give written notice of such occurrence to Debtor as follows:
(a) Debtor shall not be entitled to any notice regarding defaults
with respect to regularly scheduled monthly payment of principal and
accrued interest under the Note. However, in the event of any other
monetary default, Debtor shall have fifteen (15) days following receipt of
written notice thereof from Secured Party in which to cure such default.
(b) In the event of a nonmonetary default, Debtor shall have
fifteen (15) days after receipt of written notice thereof from Secured
Party specifying the nonmonetary default in which to effect a cure.
However, if the nonmonetary default cannot reasonably be corrected within
such fifteen (15) day period, Debtor shall have an additional thirty (30)
days in which to remedy such nonmonetary default if Debtor notifies Secured
Party of the manner in which the nonmonetary default shall be cured, and if
appropriate corrective action is instituted within the initial fifteen (15)
day period and is diligently pursued thereafter.
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6.3 Remedies. In the event that any Event of Default shall occur and
continue after any required notice and lapse of any applicable grace period, all
of the Obligations of Secured Party under this Agreement and the other Loan
Documents shall cease and terminate, and Secured Party, shall have the following
remedies:
(a) Secured Party may declare the Obligations immediately due and
payable, without further notice, protest, presentment or demand, all of
which are hereby expressly waived by Debtor.
(b) For purposes of this Section 6.3, Debtor hereby appoints
Secured Party as Debtor's true and lawful attorney-in-fact, coupled with an
interest, with power to:
(1) Endorse the name of Debtor upon any instruments of
payment, including, without limitation, payments made under any policy
of insurance, that may come into possession of Secured Party in full or
in part payment of any of the Obligations;
(2) At Secured Party's option, take such action as deemed
necessary by Secured Party to cure a default by Debtor under any
document or agreement affecting Debtor's right, title and interest in
and to the Collateral, whether superior or inferior to Secured Party's
security interest therein; and
(3) Sell, assign, sue for, collect or compromise payment of
all or any part of the Collateral in the name of Debtor or in the name
of Secured Party or make any other disposition of Collateral, or any
part thereof, which disposition may be for cash, credit or any
combination thereof, and Secured
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Party may purchase all or any portion of the Collateral at public or,
if permitted by law, private sale, and in lieu of actual payment of
such purchase price, may set-off the amount of such price against the
Obligations.
For purposes of the foregoing, Debtor hereby grants to Secured Party as
Debtor's attor- ney-in-fact, full power to do any and all things necessary
to be done in and about the premises as fully and effectively as Debtor
might or could do but for this appointment. This power of attorney shall be
irrevocable so long as any of the Obligations remains outstanding.
(c) Secured Party may enter upon the Property or other premises
where the Collateral or some portion thereof is located or kept and remove
any of the Collateral therefrom to the premises of Secured Party, or
Secured Party's agent, for such time as Secured Party may desire in order
to maintain, collect, sell or liquidate the Collateral. Secured Party may
require Debtor to assemble the Collateral and make the Collateral available
to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to Debtor and to Secured Party.
(d) Secured Party shall have, in addition to any other rights and
remedies contained in this Agreement and any of the other Loan Documents,
all of the rights and remedies of a secured party under the Utah Uniform
Commercial Code in force as of the date of this Agreement, all of which
rights and remedies shall be cumulative and nonexclusive, to the extent
permitted by law.
6.4 Sale of Collateral. Any notice required to be given by Secured
Party (in addition to the notices provided in Section 6.2 of this Agreement) of
a sale or other disposition
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or intended action by Secured Party with respect to any of the Collateral or
otherwise made in accordance with the terms of this Agreement at least five (5)
days prior to such proposed action shall constitute fair and reasonable notice
to Debtor of any such action. Any or all of the Collateral, at Secured Party's
option, may be sold in conjunction with a trustee's or sheriff's sale of the
Property. The net proceeds realized by Secured Party upon any such sale or other
disposition, after deduction of the expenses of retaking, holding, preparing for
sale, selling or the like and reasonable attorney fees and any other reasonable
expenses incurred by Secured Party, shall be applied toward satisfaction of the
Obligations. Secured Party shall account to Debtor for any surplus realized upon
such sale or other disposition and Debtor shall remain liable for any
deficiency. The commencement of any action, legal or equitable, shall not affect
the security interest of Secured Party in the Collateral until all of the
Obligations, or any judgment therefor, are fully paid.
ARTICLE VII
MISCELLANEOUS
7.1 Amendments. Neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated orally and may only be modified or
amended by an instrument in writing, signed by Secured Party and Debtor.
7.2 Binding Effect. This Agreement shall be binding upon Debtor and
Debtor's successors and assigns. This Agreement shall inure to the benefit of
Secured Party, and Secured Party's successors and assigns.
7.3 Waivers. The failure at any time or times hereafter by Secured
Party to require strict performance by Debtor of any of the undertakings,
agreements or covenants
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contained in this Agreement shall not waive, affect or diminish any right of
Secured Party hereunder to demand strict compliance and performance therewith.
Any waiver by Secured Party of any Event of Default under this Agreement shall
not waive or affect any other Event of Default hereunder, whether such Event of
Default is prior or subsequent thereto and whether of the same or a different
type. None of the undertakings, agreements or covenants of Debtor under this
Agreement shall be deemed to have been waived by Secured Party, unless such
waiver is evidenced by an instrument in writing signed by an authorized officer
or official of Secured Party and directed to Debtor specifying such waiver.
7.4 Notices. Except as otherwise provided herein, all notices shall be
in writing and shall be deemed to have been sufficiently given or served when
presented personally or on the fifth day following the day on which the same is
deposited in the United States mail, by registered or certified mail, postage
prepaid, addressed as follows:
If to Secured Party, to: U.S. Bank of Utah
107 South Main Street
Salt Lake City, Utah 84111
Attn: Ms. Pauline Vosburgh
Corporate Banking
If to Debtor, to: Dick Simon Trucking, Inc.
4646 South 500 West
Salt Lake City, Utah 84123
Attn: Mr. Alban B. Lang, Chief Financial
Officer, Treasurer and Secretary
Such addresses may be changed by notice to the other parties given in the same
manner as above provided.
7.5 Indemnification. Debtor shall indemnify and hold Secured Party
harmless from and against any and all liabilities, losses, costs, damages or
expenses which might be
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incurred pursuant to or because of the Collateral or by reason of this Agreement
and from any and all claims whatsoever (other than Secured Party's own
negligence or willful misconduct) which may be asserted against Secured Party by
reason of any alleged obligations or undertakings of Secured Party to perform or
discharge any of the terms, covenants or agreements contained in this Agreement.
Should Secured Party incur any such liability pursuant to or because of the
Collateral or under or by reason of this Agreement or in defense of any such
claims or demands, the amounts thereof, including costs, expenses and reasonable
attorney fees, shall be secured hereby and Debtor shall reimburse Secured Party
therefor immediately upon demand.
7.6 Severability. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be void,
voidable or unenforce- able, such void, voidable or unenforceable term or
provision shall not affect any other term or provision of this Agreement.
7.7 Actions. Secured Party shall have the right, but not the
obligation, to commence, appear in and defend any action or proceeding which
might affect Secured Party's security, rights, duties or liabilities relating to
the Property, the Improvements or this Agreement.
7.8 No Partnership. Nothing contained in this Agreement or in any of
the Loan Documents shall be construed as creating a joint venture or partnership
between Secured Party and Debtor. There shall be no sharing of losses, costs and
expenses between Secured Party and Debtor, and Secured Party shall have no right
of control or supervision except as Secured Party may exercise the rights and
remedies provided hereunder and in the Loan Documents.
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7.9 Interpretation. Whenever the context shall require, the plural
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The article and section headings
contained in this Agreement are for purposes of reference only and shall not
limit, expand or otherwise affect the construction of any provisions hereof.
7.10 Governing Law. This Agreement and all matters relating hereto
shall be governed by, construed and interpreted in accordance with the laws of
the State of Utah.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
7.12 Termination. This Agreement shall terminate upon the full and
complete performance and satisfaction by Debtor of all of the Obligations.
DATED effective as of the date first above written.
DEBTOR:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon
--------------------------
RICHARD D. SIMON, President
SECURED PARTY:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/ Pauline Vosburgh
--------------------------
PAULINE VOSBURGH, Vice President
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EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
ASSIGNMENT OF PLANS AND SPECIFICATIONS
AND RIGHTS UNDER ARCHITECTURAL CONTRACT
THIS ASSIGNMENT OF PLANS AND SPECIFICATIONS AND RIGHTS UNDER
ARCHITECTURAL CONTRACT ("Assignment") is made and entered into effective as of
the 23rd day of May, 1996, by and between U.S. BANK OF UTAH, a Utah state
banking corporation ("Lender"), and DICK SIMON TRUCKING, INC., a Utah
corporation ("Borrower").
R E C I T A L S:
A. Borrower's general contractor, Furst Construction Company, Inc., and
John Wilhite ("Architect") entered into that certain Standard Form of Agreement
Between Design Builder and Architect (AIA Document B901), dated November 1,
1995, (the "Contract"), a copy of which is attached to and incorporated by
reference in this Assignment as Exhibit "A." Pursuant to the terms of the
Contract, Architect agreed to prepare plans and specifications (collectively
referred to as the "Plans") and to provide architectural services in
connection with the construction of certain improvements (the "Improvements")
on real property owned by Borrower located in Salt Lake County, Utah,
which is more particularly described on Exhibit "B" attached to and
incorporated by reference in this Assignment (the "Property").
B. Borrower has applied to Lender for financing for the Improvements and
other improvements to be constructed on the Property (the "Loan") in the
original principal amount of TEN MILLION DOLLARS ($10,000,000.00).
C. Lender has approved the Loan, conditioned, in part, upon this
Assignment.
D. Borrower has executed in favor of Lender a Loan Agreement, a Promissory
Note, a Deed of Trust and Security Agreement, and other documents related to the
Loan, all of which documents set forth the terms, covenants and conditions of
the Loan (collectively the "Loan Documents").
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Assignment of Contract and Plans. Borrower hereby assigns to
Lender all right, title and interest of Borrower in and to the Contract and the
Plans. This Assignment shall be effective immediately upon default by Borrower
of any term, covenant or condition of any of the Loan Documents.
2. Attorney-in-Fact. Borrower hereby irrevocably constitutes and
appoints Lender as Borrower's true and lawful attorney-in-fact, coupled with an
interest, to demand, receive and enforce all of Borrower's rights with respect
to the Contract and the Plans, to make payments under the Contract and to give
appropriate receipts, releases and satisfactions for and in behalf of and in
Borrower's name or, at the option of Lender, in the name of Lender, all with the
same force and effect as Borrower could do if this Assignment had not been made.
3. Effect of Assignment. This Assignment is for security purposes only.
Accordingly, Lender shall have no right under this Assignment to the Plans or to
enforce the provisions of the Contract until Borrower shall be in default under
any of Borrower's obligations under any of the Loan Documents. Upon the
occurrence of any such default, Lender may, without affecting any of Lender's
rights or remedies against Borrower under any other Loan Document, exercise
Lender's rights under this Assignment as Borrower's attorney-in-fact in any
manner permitted by law. In addition, Lender shall have and possess, without
limitation, any and all rights and remedies of a secured party under the Uniform
Commercial Code or as otherwise provided by law.
4. Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that there have been no prior assignments of
the Contract or the Plans,
- 2 -
<PAGE>
that the Contract is a valid, enforceable agreement, that, to the best of
Borrower's knowledge, neither party to the Contract is in default to the other
thereunder and that all terms, covenants and conditions have been performed as
required therein, except for those not due to be performed until after the date
hereof. No material change in the terms of the Contract shall be valid without
the prior written approval of Lender. Borrower shall not assign, sell, pledge,
mortgage or otherwise transfer or encumber Borrower's interest in the Contract
or in the Plans so long as this Assignment is in effect.
5. Liability of Lender. Borrower, by executing this Assignment,
acknowledges that Lender does not assume any of the obligations and duties of
Borrower under or with respect to the Contract unless and until Lender shall
have given to Architect written notice that Lender has affirmatively exercised
Lender's rights to complete or cause the completion of the construction of the
Improvements upon or after the occurrence and continuance of an event of default
under any of the Loan Documents. In the event that Lender does not undertake to
complete the construction of the Improvements, such obligations and duties shall
be assumed by the person or entity so undertaking to complete the Improvements
and designated by Lender, and Lender shall have no liability whatsoever for the
performance of any such obligations and duties. For the purpose of completing
the Improvements, Lender may reassign Lender's right, title and interest in and
to the Plans and the Contract to any persons or entities in Lender's discretion
upon notice to Architect, but without any further requirement for Borrower's or
Architect's consent, and any such reassignment shall be valid and binding upon
Borrower and Architect as fully as if each had expressly approved the same.
6. Indemnification. Borrower shall indemnify and hold Lender
harmless from and against any and all claims, demands, liabilities, losses,
lawsuits, judgments and costs
- 3 -
<PAGE>
and expenses (including, without limitation, reasonable attorney fees) to which
Lender may become exposed, or which Lender may incur, in exercising any of
Lender's rights under this Assignment, unless caused by Lender's own negligence
or intentional misconduct.
7. Right to Cure. In the event that Borrower shall fail to perform any
covenant or condition contained in the Contract, Lender, at Lender's option, may
take such action as deemed reasonably necessary by Lender to cure such default.
All costs, fees and expenses, including attorney fees and costs, incurred by
Lender in curing such default shall be paid by Borrower in accordance with the
Loan Documents.
8. Modification of Plans, Extras. No material modification of or
amendment to the Plans shall be made without obtaining the prior written
approval of Lender, after consultation with the Construction Representative (as
defined in the Loan Agreement), if deemed necessary by Lender. In addition,
unless the written consent of Lender is first had and obtained, no work on the
Improvements shall be performed pursuant to any change order which, when
aggregated with any previous change orders, would result in an increase in
construction costs by an amount equal to or exceeding TWENTY-FIVE THOUSAND
DOLLARS ($25,000.00). In the event Lender approves a change order which results
in an increase in the price for the Improvements by an amount in excess of such
amount, Borrower shall be required to pay all additional costs and expenses
resulting from any such change order out of Borrower's own funds and without use
of the Loan proceeds. Borrower shall deposit with Lender the full amount of all
additional costs and expenses resulting from such change order. Lender shall
disburse such amount in accordance with the requirements and procedures
contained in the Loan Agreement for payment of such additional costs and
expenses. Lender may withhold
- 4 -
<PAGE>
disbursement of additional Loan proceeds pending Borrower's deposit of such
additional costs and expenses with Lender.
9. Successors and Assigns. Subject to the aforesaid limitation on
further assignment by Borrower, this Assignment shall be binding upon and inure
to the benefit of the respective assigns and successors in interest of Borrower
and Lender.
10. Governing Law. This Assignment shall be construed in accordance
with the laws of the State of Utah.
11. Counterparts. This Assignment may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
12. Termination. This Assignment shall be effective and shall
continue in force so long as any obligation of Borrower to Lender, directly or
indirectly related to the Loan, remains unsatisfied.
DATED effective as of the date first above written.
LENDER:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/Pauline Vosburgh
--------------------------------
PAULINE VOSBURGH, Vice President
BORROWER:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon, President & CEO
-------------------------------------
RICHARD D. SIMON, President
- 5 -
<PAGE>
ARCHITECT'S CONSENT AND CERTIFICATION
The undersigned Architect hereby consents to the above Assignment and
each and every term thereof, and as an inducement to the closing of the Loan
described above, agrees with and certifies to Lender as follows:
1. In the event of default by Borrower under any instrument, document
or agreement relating to the Loan, Architect, at Lender's request, shall
continue performance in behalf of Lender or Lender's designee under the Contract
in accordance with the terms thereof, provided that Architect shall be
reimbursed in accordance with the Contract for all work, labor and materials
rendered in behalf of Lender or Lender's designee. In addition, in the event
Lender, as a result of a default by Borrower, undertakes to complete or cause
the completion of the construction of the Improvements, Lender or Lender's
designee shall have the right to use the Plans and the ideas, designs and
concepts contained therein, to complete the construction of the Improvements
without payment of any fees or charges in addition to those specified in the
Contract.
2. Architect shall not, without Lender's prior written consent, perform
work pursuant to any change order which, when aggregated with any and all
previous change orders, would result in an increase in construction costs by an
amount equal to or exceeding TWENTY- FIVE THOUSAND DOLLARS ($25,000.00).
3. Lender or Lender's designee may enforce the obligations of the
Contract with the same force and effect as if enforced by Borrower, and may
perform the obligations of Borrower thereunder. Architect shall accept such
performance in lieu of performance by Borrower in satisfaction of Borrower's
obligations under the Contract.
- 6 -
<PAGE>
4. Architect shall not terminate the Contract on account of any default
of Borrower thereunder without written notice to Lender and first providing
Lender a reasonable opportunity, but not less than thirty (30) days, to effect a
cure of such default or to declare Borrower in default under the Loan Agreement
and to commence to complete or cause the completion of the construction of the
Improvements. In the event Lender elects to complete or cause the completion of
the Improvements, Architect shall not terminate the Contract so long as: (a)
Lender cures a monetary default of Borrower within thirty (30) days after
receipt of notice of default from Architect; and (b) Lender cures a nonmonetary
default of Borrower within a reasonable time after receipt of notice of default
from Architect. However, nothing herein shall require Lender to cure any default
of Borrower under the Contract, but only gives Lender the option to do so.
5. Architect hereby represents to Lender that: (a) the Contract is a
valid and enforceable agreement; (b) there has been no prior assignment of the
Plans or the Contract of which Architect has notice or is aware; (c) to the best
of Architect's knowledge, neither Architect nor Borrower is in default under the
Contract; (d) all terms, covenants and conditions have been performed as
required in the Contract, except those not due to be performed until after the
date hereof; and (e) Architect is duly licensed and has authority to conduct
business in the State of Utah.
6. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief: (a) the Plans are in compliance
with, and the construction of the Improvements in accordance with the Plans
shall not be a violation of, any protective covenants, conditions or
restrictions affecting the Property; and (b) the Plans are in
- 7 -
<PAGE>
compliance with the applicable zoning and environmental ordinances and
regulations and governmental approvals.
7. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief, the Plans, the Improvements and
the proposed uses thereof conform in all respects with all applicable statutes,
regulations, rules, orders, ordinances and procedures established and
implemented by all federal, state, county and city governments, including,
without limitation, applicable Access Laws. For purposes hereof, "Access Laws"
means the Americans with Disabilities Act of 1990, the Fair Housing Amendments
Act of 1988, any other federal, state or local laws or ordinances related to
disabled access, or any statute, rule, regulation, ordinance, order of
governmental bodies and regulatory agencies, or order or decree of any court
adopted or enacted with respect thereto, as now existing or hereafter amended or
adopted.
8. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief, the construction and use of the
Improvements in accordance with the Plans will not encroach or interfere with
any easement, right-of-way or other restriction.
9. Appropriate permits, covering the construction of the Improvements
have been issued, or will be issued upon request, and no violations or
corrective requirements have been issued to the date hereof by any governmental
authority having jurisdiction over the Property.
10. Architect has exercised due professional care and to the best of
Architect's knowledge, information and belief, Architect is satisfied that
adequate sewage, water, natural
- 8 -
<PAGE>
gas, electrical and street improvements are or will be available to site
(including easements therefor).
11. Soil tests have been performed on the Property and the
recommendations contained therein have been incorporated into the Plans.
DATED effective as of the _____ day of May, 1996.
ARCHITECT:
------------------------------------------
JOHN WILHITE
- 9 -
<PAGE>
EXHIBIT "A"
ARCHITECT'S CONTRACT
<PAGE>
EXHIBIT "B"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
B-2
<PAGE>
ASSIGNMENT OF PLANS AND SPECIFICATIONS
AND RIGHTS UNDER ARCHITECTURAL CONTRACT
THIS ASSIGNMENT OF PLANS AND SPECIFICATIONS AND RIGHTS UNDER
ARCHITECTURAL CONTRACT ("Assignment") is made and entered into effective as of
the 23rd day of May, 1996, by and between U.S. BANK OF UTAH, a Utah state
banking corporation ("Lender"), and DICK SIMON TRUCKING, INC., a Utah
corporation ("Borrower").
R E C I T A L S:
A. Borrower's general contractor, Furst Construction Company, Inc., and
Valentiner Crane Brunjes Onyon Architects, P.C. ("Architect") entered into that
certain Standard Form of Agreement Between Design Builder and Architect
(AIA Document B901), dated March 4, 1996, (the "Contract"), a copy of which
is attached to and incorporated by reference in this Assignment as Exhibit
"A." Pursuant to the terms of the Contract, Architect agreed to prepare plans
and specifications (collectively referred to as the "Plans") and to provide
architectural services in connection with the construction of certain
improvements (the "Improvements") on real property owned by Borrower located
in Salt Lake County, Utah, which is more particularly described on Exhibit
"B" attached to and incorporated by reference in this Assignment (the
"Property").
B. Borrower has applied to Lender for financing for the Improvements and
other improvements to be constructed on the Property (the "Loan") in the
original principal amount of TEN MILLION DOLLARS ($10,000,000.00).
C. Lender has approved the Loan, conditioned, in part, upon this
Assignment.
D. Borrower has executed in favor of Lender a Loan Agreement, a Promissory
Note, a Deed of Trust and Security Agreement, and other documents related to the
Loan, all of which documents set forth the terms, covenants and conditions of
the Loan (collectively the "Loan Documents").
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Assignment of Contract and Plans. Borrower hereby assigns to
Lender all right, title and interest of Borrower in and to the Contract and the
Plans. This Assignment shall be effective immediately upon default by Borrower
of any term, covenant or condition of any of the Loan Documents.
2. Attorney-in-Fact. Borrower hereby irrevocably constitutes and
appoints Lender as Borrower's true and lawful attorney-in-fact, coupled with an
interest, to demand, receive and enforce all of Borrower's rights with respect
to the Contract and the Plans, to make payments under the Contract and to give
appropriate receipts, releases and satisfactions for and in behalf of and in
Borrower's name or, at the option of Lender, in the name of Lender, all with the
same force and effect as Borrower could do if this Assignment had not been made.
3. Effect of Assignment. This Assignment is for security purposes only.
Accordingly, Lender shall have no right under this Assignment to the Plans or to
enforce the provisions of the Contract until Borrower shall be in default under
any of Borrower's obligations under any of the Loan Documents. Upon the
occurrence of any such default, Lender may, without affecting any of Lender's
rights or remedies against Borrower under any other Loan Document, exercise
Lender's rights under this Assignment as Borrower's attorney-in-fact in any
manner permitted by law. In addition, Lender shall have and possess, without
limitation, any and all rights and remedies of a secured party under the Uniform
Commercial Code or as otherwise provided by law.
4. Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that there have been no prior assignments of
the Contract or the Plans,
- 2 -
<PAGE>
that the Contract is a valid, enforceable agreement, that, to the best of
Borrower's knowledge, neither party to the Contract is in default to the other
thereunder and that all terms, covenants and conditions have been performed as
required therein, except for those not due to be performed until after the date
hereof. No material change in the terms of the Contract shall be valid without
the prior written approval of Lender. Borrower shall not assign, sell, pledge,
mortgage or otherwise transfer or encumber Borrower's interest in the Contract
or in the Plans so long as this Assignment is in effect.
5. Liability of Lender. Borrower, by executing this Assignment,
acknowledges that Lender does not assume any of the obligations and duties of
Borrower under or with respect to the Contract unless and until Lender shall
have given to Architect written notice that Lender has affirmatively exercised
Lender's rights to complete or cause the completion of the construction of the
Improvements upon or after the occurrence and continuance of an event of default
under any of the Loan Documents. In the event that Lender does not undertake to
complete the construction of the Improvements, such obligations and duties shall
be assumed by the person or entity so undertaking to complete the Improvements
and designated by Lender, and Lender shall have no liability whatsoever for the
performance of any such obligations and duties. For the purpose of completing
the Improvements, Lender may reassign Lender's right, title and interest in and
to the Plans and the Contract to any persons or entities in Lender's discretion
upon notice to Architect, but without any further requirement for Borrower's or
Architect's consent, and any such reassignment shall be valid and binding upon
Borrower and Architect as fully as if each had expressly approved the same.
6. Indemnification. Borrower shall indemnify and hold Lender
harmless from and against any and all claims, demands, liabilities, losses,
lawsuits, judgments and costs
- 3 -
<PAGE>
and expenses (including, without limitation, reasonable attorney fees) to which
Lender may become exposed, or which Lender may incur, in exercising any of
Lender's rights under this Assignment, unless caused by Lender's own negligence
or intentional misconduct.
7. Right to Cure. In the event that Borrower shall fail to perform any
covenant or condition contained in the Contract, Lender, at Lender's option, may
take such action as deemed reasonably necessary by Lender to cure such default.
All costs, fees and expenses, including attorney fees and costs, incurred by
Lender in curing such default shall be paid by Borrower in accordance with the
Loan Documents.
8. Modification of Plans, Extras. No material modification of or
amendment to the Plans shall be made without obtaining the prior written
approval of Lender, after consultation with the Construction Representative (as
defined in the Loan Agreement), if deemed necessary by Lender. In addition,
unless the written consent of Lender is first had and obtained, no work on the
Improvements shall be performed pursuant to any change order which, when
aggregated with any previous change orders, would result in an increase in
construction costs by an amount equal to or exceeding TWENTY-FIVE THOUSAND
DOLLARS ($25,000.00). In the event Lender approves a change order which results
in an increase in the price for the Improvements by an amount in excess of such
amount, Borrower shall be required to pay all additional costs and expenses
resulting from any such change order out of Borrower's own funds and without use
of the Loan proceeds. Borrower shall deposit with Lender the full amount of all
additional costs and expenses resulting from such change order. Lender shall
disburse such amount in accordance with the requirements and procedures
contained in the Loan Agreement for payment of such additional costs and
expenses. Lender may withhold
- 4 -
<PAGE>
disbursement of additional Loan proceeds pending Borrower's deposit of such
additional costs and expenses with Lender.
9. Successors and Assigns. Subject to the aforesaid limitation on
further assignment by Borrower, this Assignment shall be binding upon and inure
to the benefit of the respective assigns and successors in interest of Borrower
and Lender.
10. Governing Law. This Assignment shall be construed in accordance
with the laws of the State of Utah.
11. Counterparts. This Assignment may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
12. Termination. This Assignment shall be effective and shall
continue in force so long as any obligation of Borrower to Lender, directly or
indirectly related to the Loan, remains unsatisfied.
DATED effective as of the date first above written.
LENDER:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/Pauline Vosburgh
--------------------------------
PAULINE VOSBURGH, Vice President
BORROWER:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon, President & CEO
-------------------------------------
RICHARD D. SIMON, President
- 5 -
<PAGE>
ARCHITECT'S CONSENT AND CERTIFICATION
The undersigned Architect hereby consents to the above Assignment and
each and every term thereof, and as an inducement to the closing of the Loan
described above, agrees with and certifies to Lender as follows:
1. In the event of default by Borrower under any instrument, document
or agreement relating to the Loan, Architect, at Lender's request, shall
continue performance in behalf of Lender or Lender's designee under the Contract
in accordance with the terms thereof, provided that Architect shall be
reimbursed in accordance with the Contract for all work, labor and materials
rendered in behalf of Lender or Lender's designee. In addition, in the event
Lender, as a result of a default by Borrower, undertakes to complete or cause
the completion of the construction of the Improvements, Lender or Lender's
designee shall have the right to use the Plans and the ideas, designs and
concepts contained therein, to complete the construction of the Improvements
without payment of any fees or charges in addition to those specified in the
Contract.
2. Architect shall not, without Lender's prior written consent, perform
work pursuant to any change order which, when aggregated with any and all
previous change orders, would result in an increase in construction costs by an
amount equal to or exceeding TWENTY- FIVE THOUSAND DOLLARS ($25,000.00).
3. Lender or Lender's designee may enforce the obligations of the
Contract with the same force and effect as if enforced by Borrower, and may
perform the obligations of Borrower thereunder. Architect shall accept such
performance in lieu of performance by Borrower in satisfaction of Borrower's
obligations under the Contract.
- 6 -
<PAGE>
4. Architect shall not terminate the Contract on account of any default
of Borrower thereunder without written notice to Lender and first providing
Lender a reasonable opportunity, but not less than thirty (30) days, to effect a
cure of such default or to declare Borrower in default under the Loan Agreement
and to commence to complete or cause the completion of the construction of the
Improvements. In the event Lender elects to complete or cause the completion of
the Improvements, Architect shall not terminate the Contract so long as: (a)
Lender cures a monetary default of Borrower within thirty (30) days after
receipt of notice of default from Architect; and (b) Lender cures a nonmonetary
default of Borrower within a reasonable time after receipt of notice of default
from Architect. However, nothing herein shall require Lender to cure any default
of Borrower under the Contract, but only gives Lender the option to do so.
5. Architect hereby represents to Lender that: (a) the Contract is a
valid and enforceable agreement; (b) there has been no prior assignment of the
Plans or the Contract of which Architect has notice or is aware; (c) to the best
of Architect's knowledge, neither Architect nor Borrower is in default under the
Contract; (d) all terms, covenants and conditions have been performed as
required in the Contract, except those not due to be performed until after the
date hereof; and (e) Architect is duly licensed and has authority to conduct
business in the State of Utah.
6. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief: (a) the Plans are in compliance
with, and the construction of the Improvements in accordance with the Plans
shall not be a violation of, any protective covenants, conditions or
restrictions affecting the Property; and (b) the Plans are in
- 7 -
<PAGE>
compliance with the applicable zoning and environmental ordinances and
regulations and governmental approvals.
7. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief, the Plans, the Improvements and
the proposed uses thereof conform in all respects with all applicable statutes,
regulations, rules, orders, ordinances and procedures established and
implemented by all federal, state, county and city governments, including,
without limitation, applicable Access Laws. For purposes hereof, "Access Laws"
means the Americans with Disabilities Act of 1990, the Fair Housing Amendments
Act of 1988, any other federal, state or local laws or ordinances related to
disabled access, or any statute, rule, regulation, ordinance, order of
governmental bodies and regulatory agencies, or order or decree of any court
adopted or enacted with respect thereto, as now existing or hereafter amended or
adopted.
8. Architect has exercised due professional care and to the best of the
Architect's knowledge, information and belief, the construction and use of the
Improvements in accordance with the Plans will not encroach or interfere with
any easement, right-of-way or other restriction.
9. Appropriate permits, covering the construction of the Improvements
have been issued, or will be issued upon request, and no violations or
corrective requirements have been issued to the date hereof by any governmental
authority having jurisdiction over the Property.
10. Architect has exercised due professional care and to the best of
Architect's knowledge, information and belief, Architect is satisfied that
adequate sewage, water, natural
- 8 -
<PAGE>
gas, electrical and street improvements are or will be available to site
(including easements therefor).
11. Soil tests have been performed on the Property and the
recommendations contained therein have been incorporated into the Plans.
DATED effective as of the _____ day of May, 1996.
ARCHITECT:
VALENTINER CRANE BRUNJES ONYON ARCHITECTS, P.C.
By: ______________________________________
Title:________________________________
AGREED AND CONSENTED TO this ____ day of May, 1996.
FURST CONSTRUCTION COMPANY, INC.
By: ______________________________________
Title: _______________________________
- 9 -
<PAGE>
EXHIBIT "A"
ARCHITECT'S CONTRACT
<PAGE>
EXHIBIT "B"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
B-2
<PAGE>
ASSIGNMENT OF CONSTRUCTION CONTRACT
THIS ASSIGNMENT OF CONSTRUCTION CONTRACT ("Assignment") is
made and entered into effective as of the 23rd day of May, 1996, by and between
U.S. BANK OF UTAH, a Utah state banking corporation ("Lender"), and DICK SIMON
TRUCKING, INC., a Utah corporation ("Borrower").
R E C I T A L S:
A. Borrower and FURST CONSTRUCTION COMPANY, INC. ("Contractor"), have
entered into that certain Standard Form of Agreement between Owner and
Contractor (AIA Document A111), dated February 7, 1994 (the "Contract"), a copy
of which is attached to and incorporated by reference in this Assignment as
Exhibit "A." Pursuant to the terms of the Contract, Contractor agreed to
construct certain improvements (the "Improvements") on real property owned by
Borrower located in Salt Lake County, Utah, which real property is more
particularly described on Exhibit "B" attached to and incorporated by reference
in this Assignment (the "Property").
B. Borrower has applied to Lender for financing (the "Loan") for the
Improvements in the original principal amount of TEN MILLION DOLLARS
($10,000,000.00).
C. Lender has approved the Loan, conditioned, in part, upon this
Assignment.
D. Borrower has executed in favor of Lender a Loan Agreement (the "Loan
Agreement"), a Promissory Note, a Deed of Trust and Security Agreement and other
documents related to the Loan, all of which documents set forth the terms,
covenants and conditions of the Loan (collectively the "Loan Documents").
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
<PAGE>
1. Assignment of Contract. Borrower hereby assigns to Lender all
right, title and interest of Borrower in and to the Contract. This Assignment
shall be effective immediately upon default by Borrower of any term, covenant or
condition of any of the Loan Documents.
2. Attorney-in-Fact. Borrower hereby irrevocably constitutes and
appoints Lender as Borrower's true and lawful attorney-in-fact, coupled with an
interest, to demand, receive and enforce all of Borrower's rights with respect
to the Contract, to make payments under the Contract and to give appropriate
receipts, releases and satisfactions for and in behalf of and in Borrower's name
or, at the option of Lender, in the name of Lender, all with the same force and
effect as Borrower could do if this Assignment had not been made.
3. Effect of Assignment. This Assignment is for security purposes only.
Accordingly, Lender shall have no right under this Assignment to enforce the
provisions of the Contract until Borrower shall be in default under Borrower's
obligations under any of the Loan Documents. Upon the occurrence of any such
default, Lender may, without affecting any of Lender's rights or remedies
against Borrower under any other Loan Document, exercise Lender's rights under
this Assignment as Borrower's attorney-in-fact in any manner permitted by law.
In addition, Lender shall have and possess, without limitation, any and all
rights and remedies of a secured party under the Uniform Commercial Code or as
otherwise provided by law.
4. Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that there have been no prior assignments of
the Contract, that the Contract is a valid, enforceable agreement, that neither
party to the Contract is in default to the
- 2 -
<PAGE>
other thereunder and that all terms, covenants and conditions have been
performed as required therein, except for those not due to be performed until
after the date hereof. No material change in the terms of the Contract shall be
valid without the prior written approval of Lender. Borrower shall not assign,
sell, pledge, mortgage or otherwise transfer or encumber Borrower's interest in
the Contract so long as this Assignment is in effect.
5. Liability of Lender. Borrower, by executing this Assignment,
acknowledges that Lender does not assume any of the obligations and duties of
Borrower under or with respect to the Contract unless and until Lender shall
have given to Contractor written notice that Lender has affirmatively exercised
Lender's rights to complete or cause the completion of the construction of the
Improvements upon or after the occurrence and continuance of an event of default
under any of the Loan Documents. In the event that Lender does not undertake to
complete the construction of the Improvements, such obligations and duties shall
be assumed by the person or entity so undertaking to complete the Improvements
and designated by Lender, and Lender shall have no liability whatsoever for the
performance of any such obligations and duties. For the purpose of completing
the Improvements, Lender may reassign Lender's right, title and interest in and
to the Contract to any persons or entities in Lender's discretion upon notice to
Contractor, but without any further requirement for Borrower's or Contractor's
consent, and any such reassignment shall be valid and binding upon Borrower and
Contractor as fully as if each had expressly approved the same.
6. Indemnification. Borrower shall indemnify and hold Lender
harmless from and against any and all claims, demands, liabilities, losses,
lawsuits, judgments and costs and expenses (including, without limitation,
reasonable attorney fees) to which Lender may
- 3 -
<PAGE>
become exposed, or which Lender may incur, in exercising any of Lender's rights
under this Assignment, unless caused by Lender's own negligence or intentional
misconduct.
7. Right to Cure. In the event that Borrower shall fail to perform any
covenant or condition contained in the Contract, Lender, at Lender's option, may
take such action as deemed necessary by Lender to cure such default. All costs,
fees and expenses, including attorney fees and costs, incurred by Lender in
curing such default shall be paid by Borrower in accordance with the Loan
Documents.
8. Modification of Plans, Extras. No material modification of or
amendment to the plans and specifications for the Improvements shall be made
without obtaining the prior written approval of Lender, after consultation with
the Construction Representative (as defined in the Loan Agreement), if deemed
necessary by Lender. In addition, unless the written consent of Lender is first
had and obtained, no work on the Improvements shall be performed pursuant to any
change order which, when aggregated with any previous change orders, would
result in an increase in the Contract price by an amount equal to or exceeding
TWENTY-FIVE THOUSAND DOLLARS ($25,000.00). In the event Lender approves a change
order which results in an increase in the price for the Improvements by an
amount in excess of such amount, Borrower shall be required to pay all
additional costs and expenses resulting from any such change order out of
Borrower's own funds and without use of the Loan proceeds. Borrower shall
deposit with Lender the full amount of all additional costs and expenses
resulting from such change order. Lender shall disburse such amount in
accordance with the requirements and procedures contained in the Loan Agreement
for payment of such additional costs and expenses. Lender may withhold
disbursement of additional Loan proceeds pending Borrower's deposit of such
additional costs and expenses with Lender.
- 4 -
<PAGE>
9. Successors and Assigns. Subject to the aforesaid limitation on
further assignment by Borrower, this Assignment shall be binding upon and inure
to the benefit of the respective assigns and successors in interest of Borrower
and Lender.
10. Governing Law. This Assignment shall be construed in accordance
with the laws of the State of Utah.
11. Counterparts. This Assignment may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
12. Termination. This Assignment shall be effective and shall
continue in force so long as any obligation of Borrower to Lender, directly or
indirectly related to or arising out of the Loan, remains unsatisfied.
DATED effective as of the date first above written.
LENDER:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/ Pauline Vosburgh
-------------------------------------
PAULINE VOSBURGH, Vice President
BORROWER:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon, President & CEO
-------------------------------------
RICHARD D. SIMON, President
- 5 -
<PAGE>
CONTRACTOR'S CONSENT AND CERTIFICATION
The undersigned Contractor hereby consents to the above Assignment and
each and every term thereof, and as an inducement to the closing of the Loan
described above, agrees with and certifies to Lender as follows:
1. In the event of default by Borrower under any instrument, document
or agreement relating to the Loan, Contractor, at Lender's request, shall
continue performance in behalf of Lender or Lender's designee under the Contract
in accordance with the terms thereof, provided that Contractor shall be
reimbursed in accordance with the Contract for all work, labor and materials
rendered in behalf of Lender or Lender's designee. In addition, in the event
Lender, as a result of a default by Borrower, undertakes to complete or cause
the completion of the construction of the Improvements, Lender or Lender's
designee shall have the right to complete the construction of the Improvements
without payment of any fees or charges in addition to those specified in the
Contract.
2. Contractor shall not, without Lender's prior written consent,
perform work pursuant to any change order which, when aggregated with any and
all previous change orders, would result in an increase in construction costs by
an amount equal to or exceeding TWENTY-FIVE THOUSAND DOLLARS ($25,000.00).
3. The disbursement provisions contained in or attached to the Loan
Agreement shall control the manner of disbursement of the Loan proceeds and
payments to Contractor notwithstanding any conflicting provisions contained in
the Contract; provided,
- 6 -
<PAGE>
however, nothing contained herein shall alter or limit Contractor's rights to
payment under the Contract.
4. Lender or Lender's designee may enforce the obligations of the
Contract with the same force and effect as if enforced by Borrower, and may
perform the obligations of Borrower thereunder. Contractor shall accept such
performance in lieu of performance by Borrower in satisfaction of Borrower's
obligations under the Contract.
5. Contractor shall not terminate the Contract on account of any
default of Borrower thereunder without written notice to Lender and first
providing Lender a reasonable opportunity, but not less than thirty (30) days,
to effect a cure of such default or to declare Borrower in default under the
Loan Agreement and to commence to complete or cause the completion of the
construction of the Improvements. In the event Lender elects to complete or
cause the completion of the Improvements, Contractor shall not terminate the
Contract so long as: (a) Lender cures a monetary default of Borrower within
thirty (30) days after receipt of notice of default from Contractor; and (b)
Lender cures a nonmonetary default of Borrower within a reasonable time after
receipt of notice of default from Contractor. However, nothing herein shall
require Lender to cure any default of Borrower under the Contract, but only
gives Lender the option to do so.
6. Contractor hereby represents to Lender that: (a) the Contract is a
valid and enforceable agreement; (b) there has been no prior assignment of the
Contract of which Contractor has notice or is aware; (c) to the best of
Contractor's knowledge, neither Contractor nor Borrower is in default under the
Contract; (d) all terms, covenants and conditions have been performed as
required in the Contract, except those not due to be performed until after the
date
- 7 -
<PAGE>
hereof; (e) to the best of Contractor's knowledge, the amounts itemized on the
budget and cost breakdown submitted by Borrower to Lender in connection with the
Loan represent sufficient funds to fulfill Borrower's contractual obligations
and the overall amount provided in the cost breakdown is adequate to complete
the construction of the Improvements with all contemplated on-site and off-site
work including permits and tie-in charges; and (f) Contractor is duly licensed
and has authority to conduct business in the State of Utah.
7. Contractor shall, upon request of Lender, promptly deliver to Lender
copies of all subcontracts pertaining to the construction of the Improvements.
DATED effective as of the ______ day of May, 1996.
CONTRACTOR:
FURST CONSTRUCTION COMPANY, INC.
By:_______________________________________
Title:__________________________________
- 8 -
<PAGE>
EXHIBIT "A"
CONSTRUCTION CONTRACT
<PAGE>
EXHIBIT "B"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
B-2
<PAGE>
BORROWER'S CERTIFICATE AND INDEMNITY
REGARDING HAZARDOUS SUBSTANCES
In connection with and as partial consideration for the making of a conditional
commitment to lend (the "Commitment") of $10,000,000.00 by U.S. BANK OF UTAH
("Lender"), to DICK SIMON TRUCKING, INC. ("Borrower"), Borrower hereby certifies
to Lender and agrees as follows:
1A. Except as disclosed in Section 1B below, Borrower has no knowledge after
due investigation of: (a) the presence of any "Hazardous Substances" (as
defined below) on that certain real property situated in Salt Lake County,
State of Utah, located at approximately 5600 West 2100 South, West Valley
City, Utah, legally described in Exhibit "A" attached hereto (the
"Property"); or (b) any spills, releases, discharges, disposal, storage or
manufacture of Hazardous Substances that have occurred or are presently
occurring on or onto the Property or any adjacent properties; or (c) any
spills or disposal of Hazardous Substances that have occurred or are
presently occurring off the Property as a result of any construction on or
operation and use of the Property.
1B. Information pertaining to Hazardous Substances:
------------------------------------------------------------------------
------------------------------------------------------------------------.
2. In connection with the construction on or operation and use of the
Property, Borrower represents for itself, its contractors, subcontractors
and any other of its agents, that, as of the date of this Certificate, it
has no knowledge after due investigation of any failure to comply with all
applicable local, state and federal environmental laws, regulations,
ordinances and administrative and judicial orders relating to the
generation, recycling, reuse, sale, storage, handling, transport and
disposal of any Hazardous Substances.
3. Borrower represents and warrants to Lender that it has duly investigated
the present and past uses of the Property and has made due inquiry of the
appropriate governmental agencies and offices having jurisdiction over the
Property and the laws regulating the environment, as to whether the
Property or any property in the immediate vicinity of the Property is or
has been the site of storage of or contamination by any Hazardous
Substances. Borrower will provide Lender with a written summary of its
investigations and copies of all inquiries and responses.
4. Borrower agrees to immediately notify Lender if Borrower becomes aware of:
(a) any Hazardous Substances or other environmental problem or liability
with respect to the Property or any adjacent property; or (b) any lien,
action or notice of the nature described in paragraph 2 above. At its own
cost, Borrower will take all actions which are necessary or desirable to
clean up any Hazardous Substances affecting the Property, including
removal, containment or any other remedial action required by applicable
governmental authorities.
5. Borrower agrees to indemnify and hold Lender harmless from and against any
and all claims, demands, damages, losses, liens, liabilities, penalties,
fines, lawsuits and other proceedings and costs and expenses (including
attorneys' fees), arising directly or indirectly from or out of, or in any
way connected with: (a) the inaccuracy of the
<PAGE>
certifications contained herein; (b) any activities on the Property during
Borrower's ownership, possession or control of the Property which directly
or indirectly result in the Property or any other property becoming
contaminated with Hazardous Substances; (c) the discovery of Hazardous
Substances on the Property or any other property; and (d) the cleanup of
Hazardous Substances from the Property or any other properties. Borrower
acknowledges that it will be solely responsible for all costs and expenses
relating to the cleanup of Hazardous Substances from the Property or from
any other properties which become contaminated with Hazardous Substances as
a result of activities on or the contamination of the Property.
6. Borrower's obligations under this Certificate are unconditional and shall
not be limited by any nonrecourse or other limitations of liability
provided for in any document relating to the Loan (collectively, the "Loan
Documents"). The representations, warranties and covenants of Borrower set
forth in this Certificate (including, without limitation, the indemnity
provided for in paragraph 5 above) shall continue in effect and, to the
extent permitted by law, shall survive the transfer of the Property
pursuant to foreclosure proceedings (whether judicial or nonjudicial), by
deed in lieu of foreclosure or otherwise. Borrower acknowledges and agrees
that Borrower's covenants and obligations hereunder are separate and
distinct from its obligations under the Loan and the Loan Documents.
7. Borrower also agrees to pay all costs and expenses incurred in any
examination of the Property that is required by Lender to determine the
presence, nature and extent of any Hazardous Substances. Any such required
examination shall be made by a qualified environmental auditor acceptable
to Lender.
8. As used in this Certificate, "Hazardous Substances" shall mean: any
substance or material defined or designated as hazardous or toxic waste,
hazardous or toxic material, or hazardous, toxic or radioactive substance
(or designated by any other similar term), by any applicable federal, state
or local statute, regulation or ordinance now in effect or in effect at any
time during either the term of the Loan Documents or the period of time
Borrower remains in possession, custody or control of the Property
following foreclosure of the Loan Documents or acceptance by Lender of a
deed in lieu of foreclosure.
9. This certificate shall be binding upon and inure to the benefit of Lender
and Borrower and, as applicable, their respective heirs, personal
representatives, successors and assigns.
DATED effective as of May 23, 1996.
DICK SIMON TRUCKING, INC.
By: /s/Richard D. Simon, President & CEO
------------------------------------
RICHARD D. SIMON, President
- 2 -
<PAGE>
EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
CERTIFICATE OF COMPLIANCE WITH
ACCESS LAWS AND INDEMNIFICATION
In connection with, and as partial consideration for, the making of, amendment
to, refinancing of, renewal of, extension of, or modification to a loan (the
"Loan") dated May 23, 1996, in the amount of $10,000,000.00 by U.S. BANK OF UTAH
("the Bank"), to DICK SIMON TRUCKING, INC. ("Borrower"), Borrower hereby
certifies to the bank and agrees as follows:
1. Borrower and the real property situated in Salt Lake County, State of Utah,
more particularly described on Exhibit "A" attached hereto (the
"Property"), shall at all times comply with the requirements of the
Americans With Disabilities Act of 1990; the Fair Housing Amendments Act of
1988, any other federal, state or local laws or ordinances related to
disabled access; or any statute, rule, regulation, ordinance, order or
decree of any court adopted or enacted with respect thereto (collectively,
the "Access Laws").
2. Nothing herein shall be construed as placing an obligation on the Bank to
take any action to verify the truth or accuracy of any statement made by
Borrower herein or otherwise in connection with this transaction, nor shall
any investigation by the Bank be construed to relieve Borrower from any
liability hereunder.
3. Borrower agrees to notify the Bank immediately, in writing, if Borrower
becomes aware of any condition or situation in or on the Property which
would constitute a violation of any provision of the Access Laws (whether
now existing or hereinafter enacted). Borrower shall inform the Bank of
the nature of any such condition, situation, lien, action, or notice and of
the action Borrower proposes to take in response thereto. At Borrower's
own cost, Borrower will take all actions which are necessary to bring the
Property into compliance with the Access Laws (whether now existing or
hereinafter enacted).
4. All information previously provided by Borrower to the Bank regarding the
compliance of the Property with the Access Laws is accurate and complete to
the best of Borrower's knowledge. All future information provided to the
Bank shall also be accurate and complete to the best of Borrower's
knowledge.
5. Borrower agrees to indemnify and hold the Bank harmless from and against
any and all claims, demands, damages, losses, liens, liabilities,
penalties, fines, lawsuits, and other proceedings and costs and expenses
(including attorneys' fees) arising directly or indirectly from or out of,
or in any way connected with: (a) the inaccuracy of the certifications
contained herein; (b) any activities on the Property during the
undersigned's ownership, possession, or control of the Property which
directly or indirectly result in the Property violating any of the Access
Laws (whether now existing or hereafter enacted); and (c) the discovery of
any condition or situation on the Property which constitutes a violation of
or noncompliance with any of the Access Laws (whether now existing or
hereafter enacted). Borrower acknowledges that Borrower will be solely
responsible for all costs and expenses relating to or incurred in
connection with bringing
<PAGE>
the Property into compliance with Access Laws (whether now existing or
hereafter enacted) whether or not Borrower is in possession of the
Property.
6. Borrower's obligations under this certificate are unconditional and shall
not be limited by any nonrecourse or other limitations of liability
provided for in any document relating to the Loan (collectively, the "Loan
Documents"). The representations, warranties and covenants of the
undersigned set forth in this certificate (including, without limitation,
the indemnify provided for in paragraph 5 above) shall continue in effect
and, to the extent permitted by law, shall survive the transfer of the
Property pursuant to foreclosure proceedings (whether judicial or
nonjudicial), by deed in lieu of foreclosure or otherwise. Borrower
acknowledges and agrees that Borrower's covenants and obligations hereunder
are separate and distinct from Borrower's obligations under the Loan and
the Loan Documents.
7. This certificate shall be binding upon and inure to the benefit of the Bank
and Borrower and, as applicable, their respective heirs, personal
representatives, successors and assigns.
DATED effective as of May 23, 1996.
DICK SIMON TRUCKING, INC.
By: /s/ Richard D. Simon, President & CEO
-------------------------------------
RICHARD D. SIMON, President
- 2 -
<PAGE>
EXHIBIT "A"
PROPERTY DESCRIPTION
The following described real property is located in Salt Lake County,
Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08 feet to the South line of the Gates Rubber Company property;
thence North 89(degree)40'44" East 535.00 feet along said South line to the
Southeast corner of the Gates Rubber Company property; thence North
0(degree)06'42" East 1050.00 feet along the East line of the Gates Rubber
Company property to the South line of the 2100 South Frontage Road; thence
North 85(degree)26'00" East 66.22 feet along said South line to the point
of beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
<PAGE>
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
A-2
<PAGE>
ATTACHMENT "A"
This Financing Statement covers the following types and items of
property:
FIXTURES: - Including, without limitation, all buildings, improvements,
works, structures, facilities and fixtures, including any
future additions to, and improvements and betterments upon,
and all renewals and replacements of, any of the foregoing,
which are owned or acquired by debtor with the proceeds
of the $10,000,000 loan advanced by secured party to debtor
and which are now or hereafter shall be constructed or
affixed, or constructively affixed to the property described
below, or to any portion thereof.
EQUIPMENT: - Including, without limitation, all machinery, equipment,
appliances, floor coverings, furnishings, window coverings and
fixtures of Debtor now owned or hereafter acquired by Debtor
for use on the property described below, together with all
accessions thereto and all substitutions and replacements
thereof and all parts therefor. However, equipment does not
include Debtor's office equipment, trucks, trailers and other
titled vehicles and equipment.
RENTS: - Including, without limitation, all rents, sub-rents, issues,
royalties, income and profits of and from the property
described below, or any portion thereof, accrued or accruing to
the benefit of debtor.
CONSTRUCTION
MATERIALS: - Including, without limitation, materials and supplies
acquired by debtor with proceeds of the $10,000,000 loan
advanced by secured party to debtor and delivered to the
property described below for incorporation or used in any
construction thereon and all machinery and related items owned
by debtor and used in such construction.
Some of the above goods are to become fixtures on the following
described real property located in Salt Lake County, Utah:
Part of the North half of Section 24, Township 1 South, Range 2 West, Salt
Lake Base and Meridian described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet from
the North quarter corner of said Section 24, to a point on the Southline of
the 2100 South Freeway Right-of-Way line and running thence North
89(degree)53'03" East 330.72 feet along said South line; thence South
0(degree)05'53" West 586.45 feet; thence North 89(degree)49'59" East 330.87
feet; thence South 0(degree)05'04" West 1998.47 feet to the East-West
center of section line; thence South 89(degree)40'47" West 1263.69 feet
along said East-West center of Section line; thence North 0(degree)06'42"
East 1532.08
<PAGE>
feet to the South line of the Gates Rubber Company property; thence North
89(degree)40'44" East 535.00 feet along said South line to the Southeast
corner of the Gates Rubber Company property; thence North 0(degree)06'42"
East 1050.00 feet along the East line of the Gates Rubber Company property
to the South line of the 2100 South Frontage Road; thence North
85(degree)26'00" East 66.22 feet along said South line to the point of
beginning.
Excluding from the above-described property all the property formerly known
as Lots 25, 26 and 27, Block 5, Town of El Dorado Plat "A", together with
one-half (1/2) the vacated street and alleys abutting said lots.
Also excepting therefrom the following:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
South 85(degree)26'00" West 66.22 feet, South 0(degree)06'42" West 1050.00
feet and South 89(degree)40'44"; West 445.00 feet from the North quarter
corner of said Section 24, Township 1 South, Range 2 West, Salt Lake Base
and Meridian; said point also lies on the South line of the Gates Rubber
Company property and running thence South 0(degree)06'42" West 60.00 feet;
thence South 89(degree)40'44" West 90.00 feet; thence North 0(degree)06'42"
East 60.00 feet to the Southwest corner of the Gates Rubber Company
property; thence North 89(degree)40'44" East 90.00 feet along the South
line of the Gates Rubber Company property to the point of beginning.
Also excepting therefrom the following:
Part of the Northeast quarter of Section 24, Township 1 South, Range 2
West, Salt Lake Base and Meridian, described as follows:
Beginning at a point which lies South 0(degree)06'42" West 80.00 feet,
North 89(degree)53'03" East 330.72 feet and South 0(degree)05'53" West
586.45 feet from the North quarter corner of Section 24, Township 1 South,
Range 2 West, Salt Lake Base and Meridian (said point lies on an East line
of the property conveyed to RICHARD D. SIMON in the certain Special
Warranty Deed recorded June 14, 1994, as Entry No. 5849753, in Book 6961,
at page 1889 of the official records); and running thence North
89(degree)49'59" East 330.87 feet along a North line of said RICHARD D.
SIMON property; thence South 0(degree)05'04" West 263.31 feet along the
East of said RICHARD D. SIMON property; thence South 89(degree)49'59" West
330.93 feet; thence North 0(degree)05'53" East 263.31 feet to the point of
beginning.
Tax I.D. No. 14-24-201-003-0000.
and this or a duplicate original of this Financing Statement shall be filed with
the Utah Division of Corporations and Commercial Code and with the Salt Lake
County Recorder.
- 2 -
<PAGE>
ATTACHMENT "B"
DEBTOR:
DICK SIMON TRUCKING, INC., a Utah
corporation
By: /s/ Richard D. Simon
------------------------------
RICHARD D. SIMON, President
SECURED PARTY:
U.S. BANK OF UTAH, a Utah state banking
corporation
By: /s/ Pauline Vosburgh
-------------------------------
PAULINE VOSBURGH, Vice President
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 23rd day of
May, 1996, by RICHARD D. SIMON, who is the President of DICK SIMON TRUCKING,
INC., a Utah corporation.
/s/Alban B. Lang
------------------------------------------
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
April 20, 1999
- - ---------------------
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 23rd day of
May, 1996, by PAULINE VOSBURGH, who is a Vice President of U.S. BANK OF UTAH, a
Utah state banking corporation.
/s/ Alban B. Lang
------------------------------------------
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
April 20, 1999
- - ---------------------
- 2 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001000577
<NAME> SIMON TRANSPORTATION SERVICES INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 3,541,955
<SECURITIES> 0
<RECEIVABLES> 14,213,036
<ALLOWANCES> 66,000
<INVENTORY> 0
<CURRENT-ASSETS> 20,005,152
<PP&E> 76,388,202
<DEPRECIATION> 18,074,735
<TOTAL-ASSETS> 78,655,652
<CURRENT-LIABILITIES> 16,747,718
<BONDS> 30,751,769
0
0
<COMMON> 47,420
<OTHER-SE> 27,757,318
<TOTAL-LIABILITY-AND-EQUITY> 78,655,652
<SALES> 0
<TOTAL-REVENUES> 70,021,189
<CGS> 0
<TOTAL-COSTS> 63,557,766
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,200,133
<INCOME-PRETAX> 4,263,290
<INCOME-TAX> 4,606,807
<INCOME-CONTINUING> (343,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,517)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
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