<PAGE>
F O R M 10 - KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
______________
For the fiscal year ended December 31, 1996
_________________
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
_________________
For the transition period from ______________ to _______________
Commission file number O-7267
______
WEB PRESS CORPORATION
_____________________
Washington 91-0851298
_______________________________ ________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22023 68th Avenue South, Kent, Washington 98032
_________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 395-3343
______________
Securities Registered Pursuant to 12(b) of the Act:
Title of each class Name of each exchange on which registered
None _________________________________________
____
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.025
_________________________________________________________________
(Title of Class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
___ ___
All reports during the preceding 12 months have been filed.
State issuer's revenues for its most recent fiscal year....$6,617,406.
<PAGE>
As of March 1, 1997, 3,105,413 common shares were outstanding, and
the aggregate market value of the common shares (based upon the
closing bid price provided by the National Quotation Bureau, Inc.)
held by non-affiliates was approximately $453 thousand.
Documents incorporated by reference: Exhibits as described in
Part III, Item 13.
<PAGE>
WEB PRESS CORPORATION
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-KSB
ITEM DESCRIPTION PAGE
____ ___________ ____
PART I
1. BUSINESS....................................... 4
2. PROPERTIES...................................... 6
3. LEGAL PROCEEDINGS.............................. 7
4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS................................ 7
PART II
5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS............. 8
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS... 8
7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..... 12
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.......... 12
PART III
9. DIRECTORS AND EXECUTIVE OFFICERS
OF REGISTRANT................................... 13
10. EXECUTIVE COMPENSATION.......................... 14
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT........................... 15
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.. 16
13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K......................... 17
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
WEB PRESS CORPORATION
PART I
ITEM 1. BUSINESS
(A) General Development of Business
Web Press Corporation (herein referred to as "Web" or "Company")
was founded in late 1967 under the name "Web Press Aid" as a sole
proprietorship. The company was incorporated in November, 1969
under the laws of the State of Washington. Initially, the
Company was involved primarily in the rebuilding and repair of
web-fed printing presses and related equipment. Shortly after
incorporation, the Company undertook the development of a line of
printing press equipment of its own design. During 1972, the
Company commenced production of this equipment. While the
manufacture of new equipment is now the Company's primary
business, it continues to deal in rebuilt and used equipment as
an adjunct to its new press sales. The Company also sells parts
and service for its new equipment. The sale of new and used
presses accounted for approximately 82% and 3%, respectively, of
the Company's revenues in 1996. The Company's presses are
primarily designed to print on absorbent paper such as newsprint.
Products produced by the presses are newspapers (both broadsheet
and tabloid sizes), shoppers, advertising inserts, and paperback
books.
During 1984 and 1985, the Company developed four models of a new
high-speed press and added them to its product line. In 1992,
the Company added a new size cutoff to this line of presses,
increasing the number of models to six.
In 1995, the Company introduced and sold its first integrated
rollstand perfecting unit (IRU). The IRU has a single roll
position under the perfecting unit in place of a free-standing
two-position rollstand.
(B) Financial Information About Segments
See Note 7 of Notes to Consolidated Financial Statements for
information about the Company's operations by segment and
geographic area for the years ended December 31, 1996 and 1995.
(C) Narrative Description of Business
Equipment which Web Press Corporation manufactures consists of
two basic products, the Web Leader and the Atlas. The Atlas is
made in six different models. The principal difference between
the Web Leader and the Atlas is that the Atlas is fifty percent
faster. Each press is composed of standard modules to unwind,
print, cutoff and fold the roll of paper into a finished product.
Each is arranged to meet the particular printer's requirements
<PAGE>
for the number of pages, color, and size of his products.
Following are descriptions of these modules:
PERFECTOR. Web's perfector is a rotary offset perfecting
printing press unit, consisting of two printing couples running
"back-to-back". Each perfector will print four broadsheet-size
newspaper pages, in one color, on each revolution of the printing
couples. Perfectors can be configured to print up to four
colors. They can print up to 32 broadsheet-size pages.
QUADRA-COLOR UNIT. Web's Quadra-Color unit consists of four
printing stations mounted around a common impression cylinder.
This unit prints four colors on two broadsheet-size pages at a
time. It offers better control over color register and thus is
capable of greater accuracy in color printing than conventional,
unit-to-unit methods for color printing. It is used in
conjunction with the Company's other products to provide close
register, four-color capability in the printing system.
FOLDER. Web's folder is used in conjunction with perfecting and
Quadra-Color units to fold the printed paper into a finished
product. The folder cuts the paper off in every plate cylinder
revolution and folds it in standard broadsheet-size newspapers,
tabloid-size papers, and shopping-flyer or magazine-size
products. The Company also produces two folder styles which have
the capability of making a second parallel fold to produce
"digest"-size signatures which are used in printing some books
and pamphlets.
TWO-POSITION ROLL ROLLSTANDS. Web's rollstand supports two, 42-
inch diameter rolls of 36-inch wide paper and is used in
conjunction with the perfector and Quadra-Color units. The
rollstand controls the unwinding of the paper roll and feeds it
to the printing units under controlled tension.
Web Press Corporation markets its products through Company
employed representatives in the United States and Canada.
Foreign sales are made through independent organizations in Latin
America, Asia, Europe, and the Middle East.
The Company's presses are sold in a highly competitive world
market. Competition is based on a combination of price, service,
quality, and the versatility of the equipment. Web's presses are
priced competitively with similar products. The Company believes
that features incorporated in its presses, as well as the
Company's policies of supporting its customers, will allow it to
continue to be very competitive. Web Press Corporation is the
only manufacturer in the United States producing a Quadra-Color
unit for its market.
The primary competitors of the Company are Goss Graphic Systems,
P.E.C. Corporation (King Press Division), and Harris Graphics.
Certain of these companies have financial resources in excess of
the Company's.
<PAGE>
The most important materials employed in Web's product line are
steel and aluminum (plate and bar stock), tubing, bearings, and
rubber coverings. All are available through local suppliers.
The Company believes that its sources of supply for these
materials are adequate for its needs and that it is not
substantially dependent upon any one supplier. Lead times of up
to six months are required at some times for certain materials.
Web Press Corporation maintains an ongoing program of product
development and improvement. This program consists primarily of
technical improvements and supplementary developments which have
produced features and capabilities that management believes will
result in competitive marketing advantages for Web's product
line. In 1996, $282 thousand was expended for research and
development compared to $228 thousand in 1995.
Total employment of 54 persons as of December 31, 1996 compares
with approximately 63 at December 31, 1995.
Substantially all of the Company's operations are run by electri
cal energy purchased from a local utility. The Company has not
experienced energy shortages and does not anticipate any
difficulties in the foreseeable future. Extended shortages of
energy would have an adverse impact on the Company.
Compliance with federal, state and local environmental protection
laws during 1996 had no material effect upon capital
expenditures, earnings, or the competitive position of Web Press
Corporation.
(D) Foreign Operations
The Company's foreign operations consist entirely of export sales
and related services originating at its facilities within the
United States. Export sales accounted for 62.3% of total sales
in 1996 and 48.2% in 1995. Further financial information
relating to foreign operations for the two years ended December
31, 1996, is set forth in Note 7 (Segment Information) of the
Notes to Consolidated Financial Statements.
ITEM 2. PROPERTIES
OFFICE AND MANUFACTURING FACILITIES. The Company presently
occupies approximately 49,000 square feet of leased office and
manufacturing space at 22023 68th Avenue South, Kent, Washington.
The term of the lease is ten years, commencing six months from
the date of occupancy by the Company in May 1988, with two five-
year renewal options. There are three options for leasing
additional, adjacent space of 8,000 square feet each. There was
no rent for the first six months after the Company occupied the
premises. In addition, the lease required the lessor to finance
$150,000 of leasehold improvements and other costs incurred by
<PAGE>
the Company. The total monthly payment, including amortization
of the $150,000 financed, is $14,451.
The Company has arrangements for small offices for each of its
three salesmen who are located in Burlington, Vermont; Lee's
Summit, Missouri and Charlotte, North Carolina.
ITEM 3. LEGAL PROCEEDINGS
LITIGATION. There are no material pending legal proceedings,
other than ordinary legal matters incidental to the Company's
business, to which the Company is a party or in which any of the
Company's property is the subject.
ENVIRONMENTAL PROCEEDINGS. There are no proceedings against the
Company involving federal, state or local statutes or ordinances
dealing with environmental protection.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
_______
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
(A) Principal Market, Stock Price, and Dividend Information
Although certain dealers regularly provide quotations on the
Company's stock, actual trading activity is limited.
The following table sets forth the high and low bid quotations
per share for the Company's common stock for the periods
indicated. These figures were provided by certain market makers
and may reflect inter-dealer prices, without retail mark-up, mark-
down or commission. They do not necessarily represent actual
transactions.
1996 1995
____ ____
Quarter High Low High Low
_______ ____ ___ ____ ___
First $.375 $.3125 $.25 $.0625
Second .4375 .375 .1875 .0625
Third .4375 .375 .4375 .0625
Fourth .375 .375 .5 .125
The Company has paid no dividends during the two years ended
December 31, 1996.
(B) Approximate Number of Holders of Common Stock
The number of holders of record for the Company's common stock as
of March 11, 1997 was 557.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
________
Web Press operates in a segment of the graphic arts industry.
Its primary business is the manufacture and sale of rotary
offset, web-fed printing presses. These products are designed
for the use in printing newspapers, shoppers, advertising
inserts, paperback books and similar products. The market is
dominated by four domestic manufacturers. Sales in the industry
are sensitive to advertising expenditures, long-term interest
rates and newsprint shortages. The product is labor intensive;
materials shortages are rare; and technical obsolescence has not
been a significant factor.
<PAGE>
OPERATING RESULTS
_________________
1996 Compared with 1995
_______________________
Sales in 1996 were $6.617 million, a decrease of $2.334 million
from 1995 sales of $8.951 million. The Company anticipated lower
sales of both used presses and parts in 1996. The Company had
fewer used presses in inventory to sell and the number of
acceptable used presses being offered as trade-ins has declined.
In 1995, the Company received an exceptionally high number of
very large parts orders for rebuilding presses. New equipment
sales, domestically, were lower in 1996 because customers bought
smaller press configurations, reducing the average sales price
per order received. International sales of new equipment
continued to grow in 1996, increasing 7.5 percent to $3.887
million, 58.7 percent of total sales. The Company sold presses
to new customers in two countries where it previously had no
equipment installed.
The gross profit margin on sales increased to 26.9 percent in
1996, compared to 24.1 percent in 1995. The improved gross
profit margin was the result of a 16.2 percent improvement in the
average gross profit percentage for new equipment, and because
new equipment sales, which have a higher gross profit margin than
used equipment, were a larger percentage of total sales. New
equipment accounted for 82.5 percent of total sales in 1996,
compared to 72.9 percent in 1995. Cost of sales in 1996 included
a write-down of $80 thousand for certain used equipment and
obsolete parts. The gross profit margin on parts sales declined
6.5 percent in 1996, compared to 1995, due to lower sales volume
and because the Company has not raised its selling prices for
parts in over two years.
Selling, general and administrative expenses increased $332
thousand in 1996 from 1995. The increase was the result of a
$400 thousand separation payment due the former President/General
Manager of the Company upon his retirement. Without that
expense, selling, general and administrative expenses would have
declined $68 thousand, or 4.6 percent in 1996. Excluding the
$400 thousand separation expense, payroll costs declined $114
thousand in 1996, compared to 1995. The decrease was the result
of lower incentive compensation in 1996, due to lower sales. In
1996, advertising costs were $47 thousand higher and the Company
spent $46 thousand more attending several international trade
shows, compared to 1995. Most other selling, general and
administrative expenses did not change significantly.
Interest expense decreased 16.5 percent in 1996 from 1995. In
1996, average short-term borrowings from the bank were $531
thousand, compared to $643 thousand in 1995. The average
interest rate on all of the Company's borrowings from the bank
were 10.8 percent in 1996 and 11.3 percent in 1995.
<PAGE>
The Company had an operating loss of $220 thousand in 1996,
before a tax benefit of $76 thousand. Had it not been for the
$400 thousand separation expense, the Company would have had a
$180 thousand profit from operations in 1996. In 1995, the
Company had pre-tax operating income of $451 thousand. Lower
sales in 1996 is the primary reason for the lower operating
income. The 16.2 percent increase in the average gross profit
percentage on new equipment sales partially offset the lower
sales volume. The net loss for the year was $144 thousand in
1996, compared to a net earnings of $300 thousand in 1995.
1995 Compared with 1994
_______________________
Sales in 1995 were $8.951 million, an increase of $2.044 million
from 1994 sales of $6.907 million. New press sales increased
$2.820 million in 1995 from 1994. Both domestic and
international new press sales were higher, increasing $2.277
million and $543 thousand, respectively. Used press sales
declined $1.023 million in 1995 due to the Company receiving
fewer trade-in presses and having fewer used presses in inventory
to sell. Revenues from the sales of parts and service increased
19.7 percent in 1995 from 1994.
Overall gross profit margins on sales improved to 24.1 percent in
1995 compared to 19.3 percent in 1994. The improved gross margin
is the result of increased sales of new equipment, which have a
higher gross margin than used equipment, as a percentage of total
sales. New equipment accounted for 73% of total sales in 1995,
compared to 54% in 1994. The continued growth in parts sales in
1995 also contributed to the higher gross margin.
Selling, general and administrative expenses decreased 13.9
percent in 1995 from 1994. Selling expenses were lower due to
cost containment programs and restructuring. Payroll costs were
down 16.8 percent; promotional costs declined by 19.2 percent;
travel expenses were lower by 49.8 percent; and communication
expenses were down 34%. Most general and administrative expenses
were approximately the same in 1995 as they were in 1994. The
Company's president received a contractual performance bonus of
$64 thousand in 1995. There was no bonus in 1994.
Interest expense decreased 17.1 percent in 1995 from 1994.
Average short-term borrowings from the bank were $643 thousand in
1995, and $2.084 million in 1994. The Company converted $1.250
million of its short-term borrowings into term debt in December,
1994. The average interest rate on all borrowings was 11.3
percent in 1995 and 9.0 percent in 1994.
Pre-tax operating income in 1995 was $451 thousand compared to a
loss of $667 thousand in 1994. Net earnings were $300 thousand
in 1995, compared to a net loss of $478 thousand in 1994. The
$2.820 million increase in new equipment sales, higher gross mar-
<PAGE>
gin due to a more favorable sales mix, and the Company's cost
containment program all contributed to net earnings increasing
$778 thousand in 1995 from 1994.
1997
____
Because of the high value of each order for the Company's
equipment and the irregular timing of orders, projections for
particular time periods are very difficult to make.
Most economists believe the economy will continue to grow at a
slow but steady rate in 1997. The Newspaper Association of
America projects total newspaper advertising to rise 5.4 to 5.7
percent in 1997. This growth rate is well above the projected
2.3 to 2.5 percent growth rate for the overall economy in 1997.
The Company believes that because advertising growth is expected
to surpass the growth in the overall economy, domestic sales of
its presses will increase in 1997, too. Other factors which may
help sales in 1997 are that printers will continue to benefit
from lower newsprint prices, and that funds for capital equipment
purchases are available at very favorable interest rates.
Competition from used equiment should be only nominal. The
outlook for international sales continues to be very good, too.
The Company has identified prospects for its equipment in several
countries where the Company previously had no exposure, as a
direct result of the promotional activities it undertook in 1996.
In March, 1997, the Company received a commitment letter from a
leasing company to purchase up to $400 thousand of new machine
tools. The Company has ordered a new CNC lathe costing $136
thousand which it will receive in April, 1997. The Company
intends to purchase one additional new machine tool in the second
quarter of 1997 with the remaining funds.
LIQUIDITY
_________
The current ratio on December 31, 1996, was 1.8:1 and net working
capital was $2.254 million. Cash provided by operations was $895
thousand in 1996, $607 thousand more than in 1995. The increase
was the result of lower accounts receivable; higher customer
deposits, accrued expenses, and accounts payable; and noncash
expenses for depreciation and to increase the inventory valuation
reserve. Cash was used to increase inventories in 1996.
All of the increase in inventories was in finished goods, which
were $701 thousand higher in 1996 than in 1995. Used equipment
inventories and work-in-progress were lower. Raw materials and
parts inventories were unchanged.
<PAGE>
Funds provided by operations are the Company's primary source of
liquidity. In addition, the Company uses short-term debt under a
revolving line of credit with a commercial bank to finance
fluctuating working capital requirements. On December 31, 1996,
the Company had additional borrowing capacity of $601 thousand
under that line.
CAPITAL RESOURCES
_________________
Total assets decreased by $159 thousand in 1996. Stockholder's
equity declined by $144 thousand, noncurrent deferred income
taxes increased by $48 thousand, and working capital decreased by
$878 thousand. The major reason for the decrease in working
capital was a $554 thousand increase in the current portion of
long-term debt. The increase in the current portion of long-term
debt was primarily due to the reclassification of a term note to
the bank from a long-term liability to a current liability. Long-
term debt, on the other hand, was reduced by $909 thousand in
1996.
Long-term financing in the form of secured notes are used to
acquire manufacturing equipment. The Company incurred $14
thousand in additional long-term debt in 1996. As a percentage
of total capitalization, long-term debt and deferred income taxes
(net of deferred tax assets) was 9 percent of December 31, 1996.
On February 3, 1997, the Company secured new long-term debt of
$975 thousand from a bank. Most of the proceeds were used to pay
the term debt included in Current Liabilities on December 31,
1997, which matured on January 31, 1997. The new term debt
should result in an increased source of working capital for
several years to come.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data filed as part of this
report are listed in the index appearing in Item 13 to this Form
10-KSB Annual Report.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
<PAGE>
PART III
________
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are:
Name Position Age
____ ________ ___
G. B. Palmer General Manager 48
C. L. Mathison Secretary/Treasurer 54
(Effective January 30, 1997)
G. C. Sanborn Director 74
(Resigned January 30, 1997)
C. A. Gath Vice-President of Sales 56
R. M. Sprague Director 57
(Effective January 30, 1997)
P. F. Dunn Director 48
(Effective February 25, 1997)
There are no family relationships between any directors or
executive officers of the registrant. Officers are appointed by
the Board of Directors and serve at its will or until they
resign.
BUSINESS EXPERIENCE:
G. B. Palmer
____________
Mr. Palmer was appointed General Manager and a Director of the
Company on December 20, 1996. He has served as the Company's
Director of Manufacturing since 1990 and has been employed by
the Company since 1986. Prior to joining the Company, he was
Director of Manufacturing of Pacific Hoe Corporation. He is a
metallurgical engineer.
C. L. Mathison
______________
Mr. Mathison was appointed Secretary/Treasurer of the Company on
January 30, 1997. He has served as the Company's Controller
since October, 1979. Prior to joining the Company, he was
Assistant Controller of Bayliner Marine Corporation.
R. M. Sprague
_____________
Mr. Sprague was appointed a Director of the Company on January
30, 1997. He is the founder and owner of Sprague Metal Company,
a manufacturer of specialty sheet metal products. He founded
<PAGE>
the company in 1974 and has been employed in the metal trades
business for over 30 years.
P. F. Dunn
__________
Mr. Dunn was appointed a Director of the Company on February 25,
1997. He has been employed by the Boeing Aerospace Company in
various financial positions since 1973. He currently is tax
manager for the the State and Local Division. He is a Certified
Public Accountant.
C. A. Gath
__________
Prior to joining the Company as Vice-President of Sales in May
of 1985, Mr. Gath was Manager of South and Western Operations in
the Cheshire Division of Xerox Corporation, a manufacturer of
addressing and labeling equipment. He started with that
division in 1976 as a sales representative and progressed
through several management positions in sales and marketing.
G. C. Sanborn
_____________
Mr. Sanborn has been a Director of the Company since November
1969. He retired in 1978 as Owner and General Manager of
Industrial Products Company, Seattle, Washington, a distributor
of industrial supply equipment. He is now an independent
consultant. He resigned as a Director on January 30, 1997.
401(K) PLAN:
Effective January 1, 1988, the Company established a 401(K) plan
under the Internal Revenue Service Regulations. Employees are
eligible to participate after one year of service. Plan
participants self-direct their investments choosing from six
options sponsored by an insurance company. An employee who
elects to participate may contribute in a year up to the lower
of 15% of gross pay or the dollar limit under the regulations,
which in 1996 was $9,510. The Company contributes a matching
amount of 10% of the first $1,000 contributed by an employee in
a year. In addition, the Company may make a discretionary
matching contribution. The total amount is determined by the
Company's Board of Directors and allocated to the participants
based on their contributions. There were no discretionary
contributions in 1996 and 1995.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the aggregate total cash
compensation accrued during the fiscal years ended December 31, 1996,
1995, and 1994 for the chief executive officer of the Company.
<PAGE>
Annual Compensation
___________________
Long-Term All Other
Name/Principal Salary Bonus Compensation Compensation
Position Year ($) ($) $ $
______________ ____ ______ _____ ____________ ___________
W. R. Marcouiller 1996 168,301 25,763 0 400,000 (1)
President/General 1995 164,145 64,416 0 0
Manager/Director 1994 159,970 0 0 0
(Retired December 20, 1996)
G. B. Palmer 1996 55,000 0 0 0
(General Manager/Director effective December 20, 1996)
(1) On December 20, 1996, Mr. Marcouiller retired as
President/General Manager of the Company and resigned as a
Director of the Company. His employment agreement with the
Company stipulated that a payment of $400 thousand would be due
him upon termination of his employment. That amount is included
in All Other Compensation.
The registrant entered into a five-year employment agreement with Mr.
Marcouiller effective January 1, 1980. The agreement provided for
annual payments of $75,000 (adjusted for inflation) and a bonus of
12.5% of earnings before taxes on income. Effective January 1, 1985,
January 1, 1990, and January 1, 1995, the agreement was renewed for
another five years under the same terms and conditions. Mr.
Marcouiller's base salary in 1996 was $168,301.
The registrant and Mr. Marcouiller entered into a separation agreement
on March 5, 1997. Under terms of the agreement, the Company is to pay
Mr. Marcouiller a performance bonus of 12.5% of the pre-tax earnings
of the Company for the six month period ending June 30, 1997.
The Vice-President of Sales is paid commissions equal to 1% of firm
orders accepted. The remainder of the officers and directors are
under no formal compensation agreements.
During 1996, there were no options outstanding under the Company's
Stock Option Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of March 11, 1997, information
with respect to the beneficial ownership of common stock of the
Company by each person who is known by the Company to have owned
beneficially more than 5% of the Company's common stock, by each
of its officers and directors, and by its officers and directors
as a group:
<PAGE>
Percent
Name and Address Shares Owned Of Class
________________ ____________ ________
W. R. Marcouiller
9140 S.E. 54th
Mercer Island, WA 98040 1,837,500 (1) 59.17%
W. F. Carmody
10826 Auburn Ave. So.
Seattle, WA 98178 155,800 (2) 5.02
R. M. Sprague
417 Milwaukee Blvd. N.
Pacific, WA 98047 53,200 1.71
C. A. Gath
640 Jasmine Pl. N.W.
Issaquah, WA 98027 6,000 (3) .19
All Directors and Officers
as a Group (6 persons) 2,052,500 66.09%
(1) Does not include 214,500 shares (6.91%) owned by Mr.
Marcouiller's children as to which he disclaims beneficial
ownership.
(2) Includes 800 shares held as custodian for Mr. Carmody's
child as to which he disclaims beneficial ownership.
(3) Includes 1,000 shares held as custodian for Mr. Gath's
grandchild as to which he disclaims beneficial ownership.
Except as noted, each person named in the table is believed to
have sole voting and investment power over the shares owned.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No officer, director, nominee or associate of any officer,
director, or nominee was indebted to the Company in an amount in
excess of $60,000 at any time during the fiscal year ended
December 31, 1996.
R. M. Sprague, a Director of the Company and owner of Sprague
Metal Company, has an ongoing relationship with the Company as a
supplier of sheet metal products and other miscellaneous parts.
This relationship is expected to continue in the future. During
the fiscal year ended December 31, 1996, the Company purchased
parts costing $162,494 from the Sprague Metal Company. The
Company's management negotiates purchase orders and prices for
the items purchased. Management believes the prices paid are
competitive with other sources.
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 13 is
submitted as a separate section of this report.
(a) (3) The following exhibits are incorporated herein by
reference:
(3) Articles of Incorporation and by-laws. Exhibit 1 to
Registrant's Form 10-K for the year ended December 31,
1980, File No. 0-7267.
(10) Material Contracts
(10a) Exhibit 2 to Registrant's Form 10-K for the year
ended December 31, 1980 being an Employment
Agreement between the President/General Manager
and Web Press Corporation dated November, 1980.
(10b) Exhibit 3 to Registrant's Form 10-K for the year
ended December 31, 1980, File No. 0-7267 being
Web Press Corporation's Company Stock Option
Plan.
(10c) being the renewal agreement effective January 1,
1995 of the Employment Agreement between the
President/General Manager and Web Press
Corporation dated November 8, 1980.
(10d) being the lease for the Company's facilities
between Web Press Corporation (lessee) and
William J. Bennett (lessor) dated October 16,
1987.
The following exhibits are filed herewith:
(10e) being the Business Loan Agreement between Web
Press Corporation and Washington First
International Bank dated February 3, 1997.
(10f) being the Promissory Note for term financing
between Web Press Corporation and Washington
First International Bank dated February 3, 1997.
(10g) being the Business Loan Agreement between Web
Press Corporation and Washington First
International Bank and the Export Working
Capital Guarantee of the Small Business
Administration dated February 20, 1997.
<PAGE>
(10h) being the Separation Agreement between Web Press
Corporation and Wayne R. Marcouiller, former
President/General Manager of the Company dated
March 5, 1997.
(22) Subsidiaries of Registrant
(b) Report on Form 8-K
There have been no reports on Form 8-K filed during the
three months ended December 31, 1996.
SIGNATURES
__________
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WEB PRESS CORPORATION
March 14, 1997 By: /s/ Gary B. Palmer
__________________
Gary B. Palmer
General Manager
March 14, 1997 By: /s/ Craig L. Mathison
_____________________
Craig L. Mathison
Secretary/Treasurer
(Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report was signed below by the following persons on
behalf of the Company and in the capacities and on the dates
indicated.
/s/ Gary B. Palmer March 14, 1997
__________________
Gary B. Palmer
General Manager and
Director
/s/ Rufus M. Sprague March 14, 1997
____________________
Rufus M. Sprague
Director
/s/ Patrick F. Dunn March 14, 1997
___________________
Patrick F. Dunn
Director
<PAGE>
WEB PRESS CORPORATION
FORM 10-KSB
ITEMS 7, 13(a) (1) AND (2)
INDEX OF FINANCIAL STATEMENTS
The following financial statements of the registrant and
its subsidiary required to be included in Item 7 are listed
below:
Page
Consolidated Financial Statements:
Independent Auditors' Report............................ 20
Balance Sheet as of December 31, 1996................... 21
Statements of Operations for each of the two
years in the period ended December 31, 1996........... 23
Statements of Stockholders' Equity for each of
the two years in the period ended December 31, 1996... 24
Statements of Cash Flows for each of the two
years in the period ended December 31, 1996........... 25
Notes to Consolidated Financial Statements.............. 27
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Web Press Corporation
Kent, Washington
We have audited the accompanying consolidated balance sheet of
Web Press Corporation (a Washington corporation) and Subsidiary
as of December 31, 1996 and the related consolidated statements
of operations, stockholders' equity, and cash flows for the years
ended December 31, 1996 and 1995. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referrerd to above
present fairly, in all material respects, the consolidated
financial position of Web Press Corporation and Subsidiary as of
December 31, 1996, and the consolidated results of their
operations and their consolidated cash flows for the years ended
December 31, 1996 and 1995, in conformity with generally accepted
accounting principles.
/s/ Grant Thornton LLP
Grant Thornton LLP
Seattle, Washington
March 1, 1997
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS December 31, 1996
_________________
Current Assets:
Cash......................................... $ 6
Accounts receivable, less allowance for
doubtful accounts of $12 (Note 3).......... 1,440
Inventories (Notes 2 and 3).................. 3,457
Deferred tax assets (Note 4)................. 239
Prepaid expenses............................. 62
______
Total Current Assets......................... 5,204
Machinery and Leasehold Improvements,
at cost (Notes 2 and 3):
Machinery and equipment..................... 3,016
Leasehold improvements...................... 196
______
3,212
Less accumulated depreciation
and amortization........................... 2,645
______
Machinery and Leasehold Improvements (Net)... 567
______
Total Assets................................. $5,771
______
______
The accompanying notes are an integral part of these Consolidated
Financial Statements.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 1996
_________________
Current Liabilities:
Note payable to bank (Note 3)............... $ 99
Accounts payable............................ 541
Customer deposits........................... 542
Accrued expenses............................ 813
Income taxes payable (Note 4)............... 38
Current portion of long-term debt........... 917
______
Total Current Liabilities................... 2,950
Long-Term Debt, less current
portion (Note 3).......................... 53
Deferred tax liabilities (Note 4)........... 415
Commitments (Note 6)
Stockholders' Equity (Note 5):
Common stock, par value $.025 per share:
Authorized, 4,000,000 shares
Issued, 3,436,513 shares 86
Paid-in capital.......................... 320
Retained earnings........................ 2,044
______
2,450
Treasury stock, 331,100 shares
at cost................................ (97)
______
Total Stockholders' Equity................. 2,353
______
Total Liabilities and Stockholders' Equity. $5,771
______
______
The accompanying notes are an integral part of these Consolidated
Financial Statements.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
Year Ended December 31,
_______________________
1996 1995
____ ____
Sales (Note 7)...................... $6,617 $8,951
Cost of Sales....................... 4,836 6,794
______ ______
1,781 2,157
Selling, general and
administrative expenses (Note 6).. 1,805 1,473
______ ______
(24) 684
Other income........................ 7 10
Interest expense.................... (203) (243)
______ ______
(196) (233)
______ ______
Earnings (loss) before taxes
(benefit)......................... (220) 451
Taxes (benefit) on earnings
(loss)(Note 4).................... (76) 151
______ ______
Net earnings (loss)................. $ (144) $ 300
______ ______
______ ______
Net earnings (loss) per share....... $(.05) $ .10
_____ _____
_____ _____
The accompanying notes are an integral part of these Consolidated
Financial Statements.
<PAGE>
<TABLE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<CAPTION>
Common Stock Treasury Paid-in Retained
Shares Amount Stock Capital Earnings
______ ______ ________ _______
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1995 3,436,513 $86 $97 $320 $1,888
Net earnings for the year 300
_________ ___ ___ ____ ______
Balance, December 31, 1995 3,436,513 86 97 320 2,188
Net loss for the year (144)
_________ ___ ___ ____ ______
Balance, December 31, 1996 3,436,513 $86 $97 $320 $2,044
_________ ___ ___ ____ ______
_________ ___ ___ ____ ______
<FN>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
</TABLE>
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Year Ended December 31,
_______________________
1996 1995
____ ____
Cash flows from operating activities:
Net earnings (loss)................... $ (144) $ 300
Adjustments to reconcile net
earnings (loss) to net cash
provided (used) by operating
activities:
Depreciation and amortization...... 218 235
Provision for losses on accounts
receivable....................... 3 30
Inventory valuation reserve........ 80 (33)
Deferred taxes..................... (114) 151
Retirement of plant assets......... 1 1
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable................ 527 (1,230)
Refundable income taxes............ 66
Inventory.......................... (543) 1,016
Prepaid expenses................... 7 10
Accounts payable................... 137 (216)
Customer deposits.................. 529 (34)
Accrued expenses................... 156 (8)
Income taxes payable............... 38
______ ______
Total adjustments.................. 1,039 (12)
______ ______
Net cash provided by operating
activities 895 288
Cash flows from investing activities:
Capital expenditures (92) (39)
______ ______
(Continued on following page)
<PAGE>
(Continued from previous page)
Cash Flows from financing activities:
Proceeds from issuance of
long-term debt.................... 14
Payments on long-term debt.......... (369) (332)
Net borrowings (payments) on line
of credit........................ (568) 118
______ _______
Net cash used by financing
activities........................ (923) (214)
______ _______
Net increase (decrease) in cash........ (120) 35
Cash at beginning of period............ 126 91
______ _______
Cash at end of period.................. $ 6 $ 126
______ _______
______ _______
Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest $241 $302
The accompanying notes are an integral part of these Consolidated
Financial Statements.
<PAGE>
WEB PRESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 1996
Note 1 - Nature of the Company's Business:
The Company manufactures web-fed offset printing presses.
It has two product lines, the Web Leader and the Atlas. The
primary difference between the Web Leader and the Atlas is that
the Atlas is fifty percent faster and is manufactured in three
different broadsheet newspaper page lengths. The Company's
presses are designed to print on absorbent paper such as
newsprint. Among the products produced by the presses are
newspapers (both broadsheet and tabloid sizes), shoppers,
advertising inserts, and paperback books. Each press is
composed of standard modules to unwind, print, cut-off and fold
the roll of paper into a finished product. The equipment is
arranged to meet the particular printer's requirements for the
number of pages, color, and size of products.
The Company markets its presses worldwide. Company
employed sales representatives sell the Company's presses in the
United States and Canada. Foreign sales are made through
independent agents in Central and South America, Asia, Europe,
and the Middle East. Sales are based on a combination of price,
service, quality, and the versatility of the equipment.
Note 2 - Summary of Significant Accounting Policies:
Principles of consolidation
___________________________
The accompanying consolidated financial statements include
the accounts of Web Press Corporation and Web Leader
International, Inc., its wholly-owned Domestic International
Sales Corporation (DISC). All significant inter-company
accounts and transactions have been eliminated in consolidation.
Inventories
___________
Raw materials, work-in-progress and finished goods are
stated at the lower of average cost or market. Used presses and
other related press equipment are stated at the lower of cost
<PAGE>
(specific identification basis) or market. Inventory costs
include material, labor, and manufacturing overhead.
Inventories were classified as follows at December 31:
(Dollars in Thousands)
1996
____
Raw materials and parts
(including subassemblies)........ $1,126
Work-in-progress................. 622
Finished goods................... 1,292
Used equipment................... 417
______
$3,457
______
______
Machinery and leasehold improvements
____________________________________
Machinery and equipment are depreciated on the straight-
line method for financial statement purposes, based upon useful
lives of three to ten years. Leasehold improvements are
amortized over their useful lives or the term of the lease,
whichever is shorter. For income tax purposes, accelerated
methods are used for all eligible assets.
Maintenance and repairs are charged directly to costs or
expenses as incurred. Equipment of only nominal value and
renewals and betterments which do not appreciably extend the
life of the asset are charged directly to costs or expenses.
Fully depreciated or fully amortized assets which are no
longer in use or are not identifiable are written off by charges
to the allowance for accumulated depreciation and amortization.
When assets are retired or disposed of, the costs and
accumulated depreciation of such assets are removed from the
accounts and the difference between the net depreciated cost and
the amount received is recorded in the statements of operations.
Research and development costs
______________________________
Research and development costs are expensed as incurred.
Total research and development costs charged to operations
during the years ended December 31, 1996 and 1995 were $282
thousand and $228 thousand, respectively.
Revenue recognition
___________________
Revenue from sales of manufactured products under firm
contracts is recognized generally at the time equipment is
available for shipment. All freight and installation costs are
accrued at the time revenue is recognized. Estimated costs
related to product warranties are provided at the time of sale.
Proceeds received on contracts prior to recognition as a sale
are recorded as deposits.
<PAGE>
Earnings (loss) per share
_________________________
Earnings (loss) per share calculations are based on the
weighted average number of shares outstanding. The weighted
average number of shares outstanding was 3,105,413 in 1996 and
1995.
Estimates
_________
The Company makes certain cost estimates when it records a
press sale and uses other estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements. All are
reported in conformity with generally accepted accounting
principles. Company management believes the basis for these
estimates are acurately reflected in the financial statements;
however, actual results may differ from estimated amounts.
Note 3 - Financing:
On December 31, 1996, the Company had a financing facility
with a commercial bank consisting of a term note and a line of
credit. The balance owing on the term note was $796 thousand
and the balance owing on the line of credit was $99 thousand.
The interest rate charged on both loans is 2.5 percent above the
bank's prime rate. The rate was 10.75 percent on December 31,
1996. Both loans matured on January 31, 1997. On February 3,
1997, the Company paid the bank the balance owing on the term
note and paid off the line of credit, which was $343 thousand on
that date. Funds received from a financing facility with
another bank were used to pay both loans.
The new financing facility, which commenced on February 3,
1997, consists of a term note for $975 thousand and a line of
credit for $800 thousand. The term loan requires the Company to
make 48 monthly payments of $24,838. The first payment is due
on March 3, 1997. The final payment is due on February 3, 2001.
The line of credit, which is for one year, will be reduced to
$700 thousand on October 1, 1997. The interest rate charged on
both loans is 2 percent above the bank's prime rate. The rate
was 10.25 percent on February 28, 1997.
On February 20, 1997, a second line of credit for borrowing
up to an additional $1 million to manufacture equipment for
export was established with the new bank. The loan is a
revolving line of credit based on a series of transactions
backed by letter of credit orders acceptable to the bank. The
line is for one year and is secured by an "export working
capital guarantee" from the Small Business Administration. The
interest rate charged is 1.5 percent above the bank's prime
rate. The rate was 9.75 percent on February 20, 1997.
<PAGE>
Accounts receivable, firm orders in production, inventories
and values in excess of the long-term financing on equipment are
pledged as collateral.
Long-term debt consists of the following:
(Dollars in Thousands)
December 31, 1996
_________________
Term note, 2.5% above prime rate,
due in monthly installments of $26,831
including interest. Final payment
estimated at $801,996 due January, 1997... $796
Note payable for equipment, 10.75%,
due in monthly installments of $8,903
including interest. Final payment due
in September, 1997........................ 77
Note payable for equipment and leasehold
improvements, 12%, due in monthly install-
ments of $2,262 including interest.
Final payment due in October, 1998........ 44
Note payable for equipment, 10%, due in
monthly installments of $1,039 including
interest. Final payment due in
November, 1998............................ 22
Note payable for equipment, 7.65%, due in
monthly installments of $714 including
interest. Final payment due in
February, 1999............................ 17
Note payable for equipment, 8.23%, due in
monthly installments of $277 including
interest. Final payment due in December,
2001...................................... 14
____
970
Less current portion...................... 917
____
$ 53
____
____
Equipment with an original cost of $694 thousand is pledged
as collateral under the notes payable for equipment and the
equipment purchase contracts.
<PAGE>
Maturities of the long-term debt for the next five years
are as follows:
(Dollars in Thousands)
1997 $917
1998 43
1999 4
2000 3
2001 3
Note 4 - Income Taxes:
The taxes (benefit) on earnings (loss) consist of the
following:
(Dollars in Thousands)
Year Ended December 31,
_______________________
1996 1995
____ ____
Currently payable $ 38 $
Deferred taxes (benefit) (114) 151
____ _____
$(76) $151
____ ____
____ ____
The taxes (benefit) on earnings (loss) differ from the
federal statutory rate as follows:
(Dollars in Thousands)
Year Ended December 31,
1996 1995
Taxes (benefit) at statutory rate $(75) $153
Permanent difference 3 3
AMT credit carryforward (20)
Prior year tax adjustment 1 15
Other (5)
____ ____
$(76) $151
____ ____
____ ____
The components of deferred taxes included in the balance
sheet as of December 31, 1996 are as follows:
(Dollars in Thousands)
______________________
Current deferred tax assets:
Gross margin on deferred sales.. $(76)
Inventory valuation reserve..... 99
Compensation payable............ 177
Other........................... 39
____
$239
____
____
(Continued on next page)
<PAGE>
(Continued from previous page)
Non-current deferred tax liabilities:
Deferred DISC income............ $351
Excess tax depreciation......... 56
Other........................... 18
____
$415
____
____
The Company used all of its net operating loss
carryforwards and its alternative minimum tax credit in 1996.
Note 5 - Common Stock:
The Company's Stock Option Plan permits issuance of stock
options to key employees at prices not less than 100% of market
price at the date of grant. An aggregate of 600,000 shares of
common stock is reserved in connection with this Plan. As of
December 31, 1996, no options have been granted under this Plan.
Note 6 - Commitments:
On December 20, 1996, Wayne R. Marcouiller,
President/General Manager of the Company for the past 22 years,
retired. The employment agreement between the Company and the
former President/General Manager stipulated that a payment of
$400 thousand would be due him upon termination of his
employment. The $400 thousand liability is included in accrued
expenses on December 31, 1996. It will be paid in 1997. The
Company committed, in a Separation and Release Agreement with
the former President/General Manager, to pay him a performance
bonus in 1997 based on the profits of the Company for the six
month period ending June 30, 1997. That bonus is 12.5 percent
of the pre-tax earnings of the Company for that period. Another
commitment of the Separation Agreement is that the Company is to
provide continuing health insurance coverage for five years.
In October 1987, the Company executed a ten-year lease,
commencing six months from the date of occupancy, for a 49,000
square foot manufacturing and office facility located in Kent,
Washington. The Company moved into this facility in May 1988.
The lease included two five-year renewal options and required
the lessor to finance $150,000 of leasehold improvements and
other costs incurred by the Company. The total monthly payment
is $14,451.
Rental expense was $152 thousand in 1996 and $150 thousand
in 1996.
<PAGE>
Remaining minimum rental commitments are as follows:
(Dollars in Thousands)
1997......... $146
1998......... 122
____
$268
____
____
The Company has a commitment letter from a leasing company to
purchase up to $400 thousand of new machine tools. The Company
has ordered a new CNC lathe costing $136 thousand which it will
receive in April, 1997. The Company intends to purchase one
additional new machine tool in the second quarter of 1997 with
the remaining funds.
Note 7 - Market Segment and Concentration Information:
Substantially all of the Company's operations relate to the
manufacture and sale of printing presses and associated equipment.
The Company markets its presses worldwide. International sales
accounted for 62.3% of total sales in 1996 and 48.2% in 1995. The
Company is not dependent on any country or region of the world for
international sales and domestic sales are disseminated throughout
the United States.
Export sales of equipment by geographical area were as
follows:
(Dollars in Thousands)
Year Ended December 31,
_______________________
1996 1995
____ ____
Asia $1,529 $
Western Hemisphere 1,980
Europe 2,405 1,823
______ ______
$3,934 $3,803
______ ______
______ ______
The Company normally has one or more individual press sales
which account for more than 10% of revenues in a given year. It
is uncommon for a customer to place a large order for additional
equipment in the years immediately following purchase of a press.
On an ongoing basis, the Company does not believe it is dependent
on any one customer for a significant portion of its business.
During 1996, the Company had sales to two separate customers
which, as a percentage of total consolidated sales, were 17.1%
and 20.4%. In 1995, the Company had sales to two separate
customers which accounted for 11.1% and 11.4% of sales.
Note 8 - Retirement Savings Plan:
The Company has a 401(k) plan covering all employees who have
completed one year of service. Plan participants self-
<PAGE>
direct their investments choosing from six options sponsored by an
insurance company. The Company matches up to 10% of the first
$1,000 contributed by the employee in a year. The Company may
also make discretionary contributions to the plan. Fees paid
the insurance company plus the Company's matching contribution
totaled approximately $6 thousand in 1996 and $9 thousand in
1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 1,452
<ALLOWANCES> 12
<INVENTORY> 3,457
<CURRENT-ASSETS> 5,204
<PP&E> 3,212
<DEPRECIATION> 2,645
<TOTAL-ASSETS> 5,771
<CURRENT-LIABILITIES> 2,950
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 2,267
<TOTAL-LIABILITY-AND-EQUITY> 5,771
<SALES> 6,617
<TOTAL-REVENUES> 6,624
<CGS> 4,836
<TOTAL-COSTS> 4,836
<OTHER-EXPENSES> 1,802
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 203
<INCOME-PRETAX> (220)
<INCOME-TAX> (76)
<INCOME-CONTINUING> (144)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (144)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
<PAGE>
Exhibit 10e
(10e) being the Business Loan Agreement between Web Press Corporation and
Washington First International Bank dated February 3, 1997.
<PAGE>
BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Borrower: WEB PRESS CORPORATION AND WEB LEADER Lender: Washington First International Bank
INTERNATIONAL, INC. 9709 Third Avenue Northeast
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH Suite 110
KENT, WA 98032 SEATTLE, WA 98115
==================================================================================================================================
</TABLE>
THIS BUSINESS LOAN AGREEMENT between WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC. ("Borrower") and Washington First International Bank
("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
which 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 referred to in this
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 February 3, 1997, 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
States 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 WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, 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 in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
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, surelies, 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 well 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 Washington First International Bank, 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, if 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 in 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 date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "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 (f) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean 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,
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 2
(Continued)
===============================================================================
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 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.
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 in 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,
patents, copyrights, organizational expenses, and similar intangible items,
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 Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
---------------
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel, including without limitation
any guaranties described below.
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 correct.
No Event of Default. There shall not exist at the time of any advance a
--------------------
condition which would constitute an Event of Default under this Agreement.
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 standing under the laws of the State of Washington 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 states 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,
government 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 the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
-------------
required hereunder 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 title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. 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 Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant 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,
state, 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 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 at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are based
on Borrower's due diligence in investigating the 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,
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 3
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 effected by Lender's 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 taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
Lien Priority. unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, 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 not 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
business, is located at BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH, KENT, WA
98032. Unless Borrower has designated otherwise in writing this location is also
the office or offices where borrower keeps its 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 full force and effect until such time
as Borrower's indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last to occur.
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 in accordance with generally
accepted accounting principles, applied on a consistent basis, and permit Lender
to examine and audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no event
later than ninety (90) days after the end of each fiscal year, Borrower's
balance sheet and income statement for the year ended, audited by certified
public accountant satisfactory to Lender, and, as soon as available, but in no
event later than forty five (45) days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the period ended,
prepared and certified as correct to the best knowledge and belief by
Borrower's chief financial officer or other officer or person acceptable to
Lender. All financial reports required to be provided under this Agreement shall
be prepared in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified by Borrower as being true and
correct.
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
Borrower's financial condition and business operations as Lender may request
from time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Net Worth Ratio. Maintain a ratio of Total Liabilities to Tangible Net Worth
of less than 1.90 to 1.00.
Working Capital. Maintain Working Capital in excess of $2,000,000.00. Except
as provided above, all computations made to determine compliance with the
requirements contained in this paragraph shall be made in accordance with
generally accepted accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability insurance,
and such other insurance as Lender may require with respect to Borrower's
properties and operations, in form, amounts, coverages and with insurance
companies reasonably acceptable to Lender. Borrower, upon request of Lender
will deliver to Lender from time to time with policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least ten (10) days'
prior written notice to Lender. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be impaired in
any way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is
offered a security interest for the Loans, Borrower will provide Lender with
such 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; (c) the amount of the policy; (d) the properties
insured; (e) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lender's forms, and in the amount and under the conditions spelled out
in those guaranties.
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 4
(Continued)
================================================================================
Guarantor Amount
--------- ------
WAYNE R. MARCOUILLER $800,000.00
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 Fees and Charges. In addition to all other agreed upon fees and charges,
pay the following: $3,850.00.
Loan Proceeds. Use all Loan proceeds solely for the following purposes:
Working Capital.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
and obligations, including, without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature. Imposed
upon Borrower or its properties, income or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income, or
profits. 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 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 assessment, taxes, charges, liens and claims against
Borrower's properties, 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 laws, ordinances, rules and regulations respecting its
properties, 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
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 Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts and records and
to make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit Lender
free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender at
least annually and at 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 result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days 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 interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect. Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money, including capital
leases, (b) except as allowed as a Permitted Lien, sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's accounts,
except to Lender.
Continuity of Operations. (a) Engage in any business activities substantially
different than those in which Borrower is presently engaged. (b) cease
operations, liquidate, merge, transfer, acquire or consolidated 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 as no Event of Default
has occurred and is continuing or would result from the payment of dividends.
If Borrower is a "Subchapter S Corporation" (as defined in the Internal
Revenue Code of 1986, as amended), Borrower may pay cash dividends on its
stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise solely
from their status as Shareholders of a Subchapter S Corporation because of
their ownership of shares of 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,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; or (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
DISPOSITION OF CASH COLLATERAL ACCOUNT PROCEEDS.
Account proceeds will be deposited to cash collateral account #__120004015_____:
________ all proceeds.
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 5
(Continued)
================================================================================
___ proceeds of accounts or invoices assigned
___ (specify)________________________________
Cash Collateral account funds will be applied to note balance:
__MONDAY_,__WEDNESDAY______and______FRIDAY___________of each week.(day of week)
or_______days after deposit.
or_______business days after deposit.
PAYMENT OF INTEREST.
____Interest is to be paid, first from each payment.
____Interest is to be paid, monthly per billing
statement.
__X__Interest is to be paid, by charging account
#_____120004023_____________.
____Interest is to be paid,
(specify)_____________________.
COLLATERAL SCHEDULE TIMETABLES.
Borrower shall execute and deliver to Lender the following schedules:
Accounts Receivables Agings _X_ Monthly ____ Quarterly ____ Other ____ within
_20_ days.
Accounts Payable Agings _X_ Monthly ____ Quarterly ____ Other ____ within
_20_ days.
Inventory Schedules _X_ Quarterly ____ Other ____ within ____ days.
Other Schedules__________________________________.
CAPITAL EXPENDITURES PROVISION. Any capital expenditures in any fiscal year
in excess of $100,000 must be prior approved by the Lender.
PERSONAL FINANCIAL STATEMENTS AND TAX RETURNS. Personal financial statements and
tax returns of all guarantors to be submitted to Lender annually.
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 the Indebtedness against
any and all such accounts.
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.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by 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 false or misleading at any
time thereafter.
Defective Collateralization. This Agreement or any of the Related 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 a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of credit 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. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower or
Granty, as the case may be, as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding, and if
Borrower or Grantor gives Lender written notice of the creditor or
forfeiture proceeding and furnishes reserves or a surety bond for the
creditor or forfeiture proceeding satisfactory to 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. Lender, at its option, may, but shall not be
required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure the Event of Default.
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.
Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (15)
days; or (b) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in case of an Event of Default of the type described in
the "Insolvency" subsection above, such acceleration shall be automatic and not
optional. In addition, Lender shall have all the rights and remedies provided in
the Related Documents or available at law, in equity, or otherwise. Except as
may be prohibited by applicable law, all of Lender's rights and remedies shall
be cumulative an may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to declare a default
and to exercise its rights and remedies.
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 6
(Continued)
===============================================================================
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 matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
---------------
Lender in the State of Washington. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of King
County, the State of Washington. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
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.
Multiple Parties; Corporate Authority. All obligations of Borrower under
--------------------------------------
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
------------------------------
sale or transfer, whether now or later, of one or more participation
interests in the 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 matter 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 Borrower's
obligation under the Loans irrespective of the failure or insolvency of any
holder of any interest in the Loans. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
-------------------
expenses, including without limitation 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 that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment 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 parties,
specifying that the purpose of the notice is to change the party'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 finding 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, if the offending provision
cannot be so 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 this 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 this 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 have 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.
Waiver. Lender shall not be deemed to have waived any rights under this
-------
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations 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.
<PAGE>
02-03-1997 BUSINESS LOAN AGREEMENT Page 7
(continued)
================================================================================
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS, THIS AGREEMENT IS DATED AS OF
FEBRUARY 3, 1997.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
LENDER:
Washington First International Bank
By: /s/ [Signature Appears Here]
-----------------------------------------------
Authorized Officer
================================================================================
<PAGE>
PROMISSORY NOTE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801543 305
- -------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC.
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH
KENT, WA 98032
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
Principal Amount: $800,000.00 Date of Note: February 3, 1997
Initial Rate: 10.250%
PROMISE TO PAY. WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Borrower") promises to pay to Washington First International Bank ("Lender"),
or order, in lawful money of the United States of America, the principal amount
of Eight Hundred Thousand & 00/100 Dollars ($800,000.00) 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 on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on
February 3, 1998. In addition, Borrower will pay regular monthly payments of
accrued unpaid interest beginning March 3, 1997, and all subsequent interest
payments are due on the same day of each month after that. Interest on this Note
is computed on a 365/365 simple interest basis; that is, by applying the ratio
of the annual interest rate over the number of days in a year, 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. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on charges in an index which is Lender's Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. 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 DAY. The index currently is 8.250%
per annum. The interest rate to be applied to the unpaid principal balance of
this Note will be at a rate of 2.000 percentage points over the Index, resulting
in an initial rate of 10.250% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. Except for the foregoing, 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 be 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.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $15.00, whichever is greater.
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 comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase of sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's property or Borrower's ability to repay this
Note or perform Borrower's obligations under this Note or any of the Related
Documents. (d) Any representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any material respect
either now or at the time made or furnished. (i) 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. (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. (g) Any guarantor dies or any of the other events
described in this default section occurs with respect to any guarantor of this
Note. (h) A material adverse change occurs in Borrower's financial condition,
or Lender believes the prospect of payment or performance of the indebtedness is
impaired.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (an no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within (15) days; or (b) if the cur
requires more than fifteen (15) days, immediately initiates steps which Lender
deems in LLender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
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 7.000
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
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will 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 Washington. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of King County, the State of Washington. This Note shall be governed by
and construed in accordance with the laws of the State of Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preathorized charge with
which Borrower pays is later dishonored.
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 only in writing by Borrower or by an authorized
person. 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 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: GARY D. PALMER, General
Manager of Web Press Corporation and Chairman
<PAGE>
02-03-1997 PROMISSORY NOTE Page 2
(Continued)
================================================================================
of Web Leader International, Inc.; and CRAIG L. MATHISON, Controller. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrow 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; or (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender.
CREDIT LIMIT PROVISION. CREDIT LIMIT TO DECREASE FROM $800,000.00 TO $700,000.00
ON SEPTEMBER 30, 1997.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrow and
any other 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 party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
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:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
------------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
------------------------------------------------
GARY B. PALMER, General Manager: WEB-LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- -------------------------------------------------------------------------------------------------------
References in the shaded areas are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- -------------------------------------------------------------------------------------------------------
</TABLE>
Borrower: WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC.
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH
KENT, WA 98032
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
I, the undersigned Secretary or Assistant Secretary of WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. (the "Corporation"), HEREBY CERTIFY that the
Corporation is organized and existing under and by virtue of the laws of the
State of Washington as a corporation for profit, with its principal office at
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH, KENT, WA 98032, and is duly
authorized to transact business in the State of Washington.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on February 3, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURE
----- --------- ----------------
<S> <C> <C>
GARY B. PALMER General Manager: WEB PRESS CORPORATION /s/ Gary B. Palmer
--------------------
GARY B. PALMER Chairman: WEB LEADER INTERNATIONAL, INC. /s/ Gary B. Palmer
--------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
Borrow Money. To borrow from time to time form Washington First
International Bank ("Lender"), on such terms as may be agreed upon between
the Corporation and Lender, such sum or sums of money as in their judgement
should be borrowed, without limitation.
Execute Notes. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accomodations.
Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times; and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
Execute Security Documents. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances.
Negotiate Items. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
Further Acts. In the case of lines of credit, to designate additional or
alternative individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request
advances and authorize payments under the line of credit until Lender
receives written notice of revocation of their authority: GARY B. PALMER,
General Manager of Web Press Corporation and Chairman of Web Leader
International, Inc.; and CRAIG L. MATHISON, Controller.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE>
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- -------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded areas are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- -------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC.
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH
KENT, WA 98032
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
THIS COMMERCIAL SECURITY AGREEMENT is entered into between WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. (referred to below as "Grantor"); and
Washington First International Bank (referred to below as "Lender"). For
valuable consideration, Grantor grants to Lender a security interest in the
Collateral to secure the indebtedness and agrees that Lender shall have the
rights stated in this Agreement with respect to the Collateral, in addition to
all other rights which Lender may have by law.
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 States of
America.
Agreement. The work "Agreement" means this Commercial Security Agreement as
this Commercial Security Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time.
Collateral. The work "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
All inventory, accounts, equipment, general intangibles and fixtures,
together with the following specifically described property:
WHEREVER LOCATED
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral
section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
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 WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC., its successors and assigns.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the indebtedness.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents.
Lender. The word "Lender" means Washington First International Bank, its
successors and assigns.
Note. The word "Note" means the note or credit agreement dated February 3,
1997, in the principal amount of $800,000.00 from WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. to Lender, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of and
substitutions for the note or credit agreement.
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.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor 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. Grantor authorizes
Lender, to the extent permitted by applicable law, to change or setoff all
indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to lender
for possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or if this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of
Grantor. This is a continuing Security Agreement and will continue in
effect even through all or any part of the indebtedness is paid in full and
even though for a period of time Grantor may not be indebted to Lender.
No Violation. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
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02-03-1997 COMMERCIAL SECURITY AGREEMENT Page 2
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Enforceability of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is enforceable
in accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral.
At the time any account becomes subject to a security interest in favor of
Lender, the account shall be a good and valid account representing an
undisputed, bona fide indebtedness incurred by the account debtor, for
merchandise held subject to delivery instructions or theretofore shipped or
delivered pursuant to a contract of sale, or for services theretofore performed
by Grantor with or for the account debtor; there shall be no setoffs or
counterclaims against any such account; and no agreement under which any
deductions or discounts may be claimed shall have been made with the account
debtor except those disclosed to Lender in writing.
Location of the Collateral. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d) all
other properties where Collateral is or may be located. Except in the ordinary
course of its business, Grantor shall not remove the Collateral from its
existing locations without the prior written consent of Lender.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Washington, without the prior written consent of Lender.
Transactions involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. While
Grantor is not in default under this Agreement, Grantor may sell inventory, but
only in the ordinary course of its business and only to buyers who qualify as a
buyer in the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total satisfaction
of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien, security interest,
encumbrance, or charge, other than the security interest provided for in this
Agreement, without the prior written consent of Lender. This includes security
interests even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust for Lender and shall not
be commingled with any other funds; provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.
Collateral Schedules and Locations. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles, Grantor
shall deliver to Lender schedules of such Collateral, including such information
as Lender may require, including without limitation names and addresses of
account debtors and agings of accounts and general intangibles. Insofar as the
Collateral consists of inventory and equipment, Grantor shall deliver to Lender,
as often as Lender shall require, such lists, descriptions, and designations of
such Collateral as Lender may require to identify the nature, extent, and
location of such Collateral. Such information shall be submitted for Grantor
and each of its subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral. Lender and its designated
representatives and agents shall have the right at all reasonable times to
examine, inspect, and audit the Collateral wherever located. Grantor shall
immediately notify Lender of all cases involving the return, rejection,
repossession, loss or damage of or to any Collateral; of any request for credit
or adjustment or of any other dispute arising with respect to the Collateral;and
generally of all happenings and events affecting the Collateral or the value or
the amount of the Collateral.
Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's Interests in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surely bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgement before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings.
Compliance With Governmental Requirements. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law,
ordinance or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub L. No. 99-499 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conversation
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.
The terms "hazardous waste" and "hazardous substance" shall also include,
without limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos. The representations and warranties contained herein are based on
Grantor's due diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims against
Lender for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Lender against any and all claims and losses resulting from a breach of
this provision of this Agreement. This obligation to indemnify shall survive the
payment of the Indebtedness and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft, and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days' prior written notice to Lender and not including any disclaimer
of the insurer's
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02-03-1997 COMMERCIAL SECURITY AGREEMENT Page 3
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liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including if it so
chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due the reserve funds are insufficient,
Grantor shall upon demand pay any deficiency to Lender. The reserve funds
shall be held by Lender as a general deposit and shall constitute a non-
interest-bearing account which Lender may satisfy by payment of the
insurance premiums required to be paid by Grantor as they become due.
Lender does not hold the reserve funds in trust for Grantor, and Lender is
not the agent of Grantor for payment of the insurance premiums required to
be paid by Grantor. The responsibility for the payment of premiums shall
remain Grantor's sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following; (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the
property insured; (e) the then current value on the basis of which
insurance has been obtained an the manner of determining that value; and
(f) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible persona property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before of after an Event of Default. Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
not to protect, preserve or maintain any security interest given to secure the
Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or Related Documents is false or misleading in any material respect,
either now or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or such Guarantor dies or
becomes incompetent. Lender, at its option, may, but shall not be required
to, permit the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure the Event of Default.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or
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performance of the Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within () days; or (b), if the
cure requires more than () days, immediately initiates steps which Lender
deems in Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Washington Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer,
or otherwise deal with the Collateral or proceeds thereof in its own name
or that of Grantor. Lender may sell the Collateral at public auction or
private sale. Unless the Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any
other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the collateral, shall become a part of the indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
Collect Revenues, Apply Accounts. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect receipt for, settle, compromise, adjust, sue for, foreclose or
realize on the collateral as Lender may determine, whether or not
Indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor: change any address to which mail and payments are to
be sent : and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment. Shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of
a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
in equity, or otherwise.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, 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 any election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to
exercise its 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
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of King
County, the State of Washington. This Agreement shall be governed by and
construed in accordance with the laws of the state of Washington.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there is
a lawsuit, including attorneys fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all curt costs and such additional fees as
may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Multiple Parties; Corporate Authority. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
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 parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to all Grantors.
<PAGE>
02-03-1997 COMMERCIAL SECURITY AGREEMENTS Page 5
(Continued)
================================================================================
For notice purposes, Grantor will keep Lender informed at all times of
Grantor's current address(es).
Power of Attorney. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the claim; and (d) to
file any claim or claims or to take any action or institute or take part in
any proceedings, either in its own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
Preference Payments. Any monies Lender pays because of an asserted
preference claim in Borrower's bankruptcy will become a part of the
indebtedness and, at Lender's option, shall be payable by Borrower as
provided above in the "EXPENDITURES BY LENDER" paragraph.
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 finding 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, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
Waiver of Co-obligor's Rights. If more than one person is obligated for the
indebtedness, Borrower irrevocably waives, disclaims and relinquishes all
claims against such other person which Borrower has or would otherwise have
by virtue of payment of the indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contribution or
exoneration.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY
3, 1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
----------------------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
----------------------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
14 801548 305
- -------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH
KENT, WA 98032
Guarantor: WAYNE R. MARCOUILLER
9140 SE 54TH STREET
MERCER ISLAND, WA 98040
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
AMOUNT OF GUARANTY. This is a guaranty of payment of the Note, including without
limitation the principal Note amount of Eight Hundred Thousand & 00/100 Dollars
($800,000.00).
GUARANTY. For good and valuable consideration, WAYNE R. MARCOUILLER
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Washington First International Bank ("Lender") or its order, on demand, in
legal tender of the United States of America, the Indebtedness (as that term is
defined below) of WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Borrower") to Lender on the terms and conditions set forth in this Guaranty.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word "Borrower" means WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC..
Guarantor. The word "Guarantor" means WAYNE R. MARCOUILLER.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated February 3, 1997.
Indebtedness. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees and
loan charges, and (e) all collection costs and expenses relating to the
Note or to any collateral for the Note. Collection costs and expenses
include without limitation all of Lender's attorney's fees and Lender's
legal expenses, whether or not suit is instituted, and attorneys' fee 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.
Lender. The word "Lender" means Washington First International Bank, its
successors and assigns.
Note. The word "Note" means the promissory note or credit agreement dated
February 3, 1997 in the original principal amount of $800,000.00 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement. Notice to Guarantor: The Note evidences a
revolving line of credit from Lender to Borrower.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, mortgages, deeds of trust, and all
other instruments, agreements and documents, whether now or hereafter
existing, executed in condition with the indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the amount of the indebtedness described above, plus
all costs and expenses of (a) enforcement of this Guaranty and (b) collection
and sale of any collateral securing this Guaranty.
The above limitation on the liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties. The liability
of Guarantor will be the aggregate liability of Guarantor under the terms of
this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all indebtedness within the limits set forth in
the proceeding section of this Guaranty. Any married person who signs this
Guaranty hereby expressly agrees that recourse under this agreement may be had
against both his or her separate property and community property, whether now
owned or hereafter acquired. This Guaranty covers a revolving line of credit and
guarantor understands and agrees that this guarantee shall be open and
continuous until the line of credit is terminated and the Indebtedness is paid
in full, as provided below.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness shall have
been fully paid and satisfied and all other obligations of Guarantor under this
Guaranty shall have been performed in full. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation received by Lender from
any one or more Guarantors shall not effect the liability of any remaining
Guarantors under this Guaranty. This Guaranty covers a revolving line of credit
and it is specifically anticipated that fluctuations will occur in the aggregate
amount of indebtedness owing from Borrower to Lender. Grantor specifically
acknowledges and agrees that fluctuations in the amount of indebtedness, even to
zero dollars($0.00), shall not constitute a termination of this Guaranty.
Guarantor's liability under this Guaranty shall terminate only upon (a)
termination in writing by Borrower and Lender of the line of credit, (b) payment
of the indebtedness in full in legal tender, and (c) payment in full in legal
tender of all other obligations of Guarantor under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening Guarantor's liability under this Guaranty, from
time to time: (a) to make one or more additional secured loans to Borrower, to
lease equipment or other goods to Borrower, or otherwise to extend additional
credit to Borrower; (b) to alter, compromise, renew, extend, accelerate, or
otherwise change one or more times the time of payment or other terms of the
Indebtedness or any part of the Indebtedness, including increases and decreases
of the rate of interest on the Indebtedness; extensions may be repeated and may
be for longer than the original loan term; (c) to take and hold security for the
payment of the Guaranty of the Indebtedness, and exchange, enforce, waive,
subordinated, fail or decide not to perfect, and release any such security, with
or without the substitution of new collateral; (d) to release, substitute, agree
not to sue, or deal with any one or more of Borrower's sureties, endorsers, or
other guarantors on any terms or in any manner Lender may choose; (e) to
determine how, when and what application of payments and credits shall be made
on the Indebtedness; (f) to apply such security and direct the order or manner
of sale thereof, including without limitation, any nonjudicial sale permitted by
the terms of the controlling security agreement or deed of trust, as Lender in
its discretion may determine; (g) to sell, transfer, assign, or grant
participations in all or any part of the Indebtedness; and (h) to assign or
transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements
<PAGE>
02-03-1997 COMMERCIAL GUARANTY Page 2
(Continued)
================================================================================
of any kind have been made to Guarantor which would limit or qualify in any way
the terms of this Guaranty; (b) this Guaranty is executed at Borrower's request
and not at the request of Lender; (c) Guarantor has full power, right and
authority to enter into this Guaranty; (d) the provisions of this Guaranty do
not conflict with or result in a default under any agreement or other instrument
binding upon Guarantor and do not result in a violation of any law, regulation,
court decree or order applicable to Guarantor; (e) Guarantor has not and will
not, without the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to pursue
any other remedy within Lender's power; or (f) to commit any act or omission of
any kind, or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
indebtedness shall not at all times until paid by fully secured by collateral
pledged by Borrower, 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 have or 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.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (d) any right to claim discharge of the indebtedness on the
basis of unjustified impairment of any collateral for the indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to exercise
such right of setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full force
and effect until such right of setoff or security interest is specifically
waived or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an 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 indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal lender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendments. This Guaranty, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Guaranty. No alteration of or amendment to this Guaranty
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
<PAGE>
02-03-1997 COMMERCIAL GUARANTY Page 3
(Continued)
================================================================================
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Guarantor agrees
upon Lender's request to submit to the jurisdiction of the courts of King
County, State of Washington. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Washington.
Attorney's Fees; Expenses. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorney's fees and Lender's legal
expenses, incurred in connection with the enforcement of this Guaranty.
Lender may pay someone else to help enforce this Guaranty, and Guarantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
Guarantor also shall pay all court costs and such additional fees as may be
directed by the court.
Notices. All notices required to be given by either party to the other under
this Guaranty shall be in writing, may be sent by telefacsimile, and shall
be effective when actually delivered or when deposited with a nationally
recognized overnight courier, or when 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 or to such other addresses as either
party may designate to the other in writing. If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors.
For notice purposes, Guarantor agrees to keep Lender informed at all times
of Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction so
require; and where there is more than one Borrower named in this Guaranty or
when this Guaranty is executed by more than one Guarantor, the words
"Borrowers" and "Guarantor" respectively shall mean all and any one or more
of them. The words "Guarantor," "Borrower," and "Lender" include the heirs,
successors, assigns, and transferees of each of them. Caption headings in
this Guaranty are for convenience purposes only and are not to be used to
interpret or define the provisions of this Guaranty. If a court of competent
jurisdiction finds any provision of this Guaranty to be invalid or
unenforceable as to any person or circumstance, such finding shall not
render that provision invalid or unenforceable as to any other persons or
circumstances, and all provisions of this Guaranty in all other respects
shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender
to inquire into the powers of Borrower or Guarantor or of the officers,
directors, partners, or agents acting or purporting to act on their behalf,
and any indebtedness made or created in reliance-upon the professed exercise
of such powers shall be guaranteed under this Guaranty.
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty 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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any
course of dealing between Lender and Guarantor, shall constitute a waiver of
any of Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED FEBRUARY 3, 1997.
GUARANTOR:
X /s/ WAYNE R. MARCOUILLER
--------------------------------
WAYNE R. MARCOUILLER
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- -------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- -------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC.
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH
KENT, WA 98032
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
I, the undersigned Secretary or Assistant Secretary of WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. (the "Corporation"), HEREBY CERTIFY that the
Corporation is organized and existing under and by virtue of the laws of the
State of Washington as a corporation for profit, with its principal office at
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH, KENT, WA 98032, and is duly
authorized to transact business in the State of Washington.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on February 3, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
---- --------- -----------------
<S> <C> <C>
GARY B. PALMER General Manager: WEB PRESS CORPORATION /s/ Gary B. Palmer
----------------------------
GARY B. PALMER Chairman: WEB LEADER INTERNATIONAL, INC. /s/ Gary B. Palmer
---------------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from Washington First
International Bank ("Lender"), on such terms as may be agreed upon between
the Corporation and Lender, such sum or sums of money as in their judgment
should be borrowed, without limitation.
Execute Notes. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations of the Corporation, on
lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accomodations.
Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times, and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
Execute Security Documents. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances.
Negotiate items. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request
advances and authorize payments under the line of credit until Lender
receives written notice of revocation or their authority: GARY B. PALMER,
General manager of Web Press Corporation and Chairman of Web Leader
International, Inc.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE>
02-03-1997 CORPORATE RESOLUTION TO BORROW Page 2
(Continued)
================================================================================
IN TESTIMONY WHEREOF, I have hereunto set my hand on February 3, 1997 and
attest that the signatures set opposite the names listed above are their
genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Craig L. Mathison
------------------------------------
X
------------------------------------
NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
================================================================================
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- -------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- -------------------------------------------------------------------------------------------------------
</TABLE>
Borrower: WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC.
BOTH LOCATED AT 22023-68TH AVENUE SOUTH
KENT, WA 98032
Lender: Washington First International Bank
9709 Third Avenue Northeast
Suite 110
SEATTLE, WA 98115
================================================================================
LOAN TYPE. This is a Variable Rate (2.000% over WASHINGTON FIRST INTERNATIONAL
BANK PRIME RATE, making an initial rate of 10.250%), Revolving Line of Credit
Loan to a Corporation for $800,000.00 due on February 3, 1998.
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: WORKING CAPITAL SUPPORT.
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 $800,000.00 as follows:
Amount paid to Borrower directly: $0.00
Amount paid to others on Borrower's behalf: $800,000.00
$800,000.00 CREDIT LIMIT
---------------
Note Principal: $800,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $3,850.00
$3,850.00 Loan Fees
---------------
Total Charges Paid in Cash: $3,850.00
AUTOMATIC PAYMENTS. Borrower hereby authorizes Lender automatically to deduct
from Borrower's account numbered 120004023 the amount of any loan payment. If
the funds in the account are insufficient to cover any payment, Lender shall not
be obligated to advance funds to cover the payment. At any time and for any
reason, Borrower or Lender may voluntarily terminate Automatic Payments.
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 IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED FEBRUARY 3, 1997.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
------------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
------------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
Borrower: WEB PRESS CORPORATION AND WEB LEADER Lender: Washington First International Bank
INTERNATIONAL, INC. 9709 Third Avenue Northeast
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH Suite 110
KENT, WA 98032 SEATTLE, WA 98115
==================================================================================================================================
</TABLE>
INSURANCE REQUIREMENTS. WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Grantor") understands that insurance coverage is required in connection with
the extending of a loan or the providing of other financial accommodations to
Grantor by Lender. These requirements are set forth in the security documents.
The following minimum insurance coverages must be provided on the following
described collateral (the "Collateral"):
Collateral: All inventory, Equipment and Fixtures, including WHEREVER LOCATED.
Type. All risks, including fire, theft and liability.
Amount. Full insurable value.
Basis. Replacement value.
Endorsements. Lender's loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of
ten (10) days' prior written notice to Lender.
Deductibles. $1,000.00.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, three (3)
days from the date of this Agreement, evidence of the required insurance as
provided above, with an effective date of February 3, 1997, or earlier. Grantor
acknowledges and agrees that if Grantor fails to provide any required insurance
or fails to continue such insurance in force, Lender may do so at Grantor's
expense as provided in the applicable security document. The cost of any such
insurance, at the option of Lender, shall be payable on demand or shall be added
to the indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES
THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE
LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE
OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 3, 1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
-------------------- ----------
AGENT'S NAME:
-------------------------------------------------
INSURANCE COMPANY:
--------------------------------------------------------------
POLICY NUMBER:
------------------------------------------------------------------
EFFECTIVE DATES:
----------------------------------------------------------------
COMMENTS:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$800,000.00 02-03-1997 02-03-1998 8015480003 14 801548 305
- --------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Borrower: WEB PRESS CORPORATION AND WEB LEADER LENDER: Washington First International Bank
INTERNATIONAL, INC. 9709 Third Avenue Northeast
BOTH LOCATED AT 22023-68TH AVENUE SOUTH Suite 110
KENT, WA 98032 SEATTLE, WA 98115
</TABLE>
================================================================================
I, the undersigned Secretary or Assistant Secretary of WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. (the "Corporation"), HEREBY CERTIFY that the
Corporation is organized and existing under and by virtue of the laws of the
State of Washington as a corporation for profit, with its principal office at
BOTH LOCATED AT 22023-68TH AVENUE SOUTH, KENT, WA 98032, and is duly authorized
to transact business in the State of Washington.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on February 3, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
<S> <C> <C>
GARY B. PALMER General Manager: WEB PRESS CORPORATION [SIGNATURE APPEARS HERE]
------------------------
GARY B. PALMER Chairman: WEB LEADER INTERNATIONAL, INC. [SIGNATURE APPEARS HERE]
------------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from Washington First
International Bank ("Lender"), on such terms as may be agreed upon between
the Corporation and Lender, such sum or sums of money as in their judgment
should be borrowed, without limitation.
Execute Notes. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accomodations.
Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time of such
loans are obtained or such indebtedness is incurred, or at any other time
or times, and may be either in addition to or in lieu of any property
therefore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
Execute Security Documents. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or
Proper in connection with or pertaining to the giving of the liens and
encumbrances.
Negotiate Items. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request
advances and authorize payments under the line of credit until Lender
receives written notice of revocation of their authority: GARY B. PALMER,
General Manager of Web Press Corporation and Chairman of Web Leader
International, Inc.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lendor may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE>
02-03-1997 CORPORATE RESOLUTION TO BORROW Page 2
(Continued)
================================================================================
IN TESTIMONY WHEREOF, I have hereunto set my hand on February 3, 1997 and
attest that the signatures set opposite the names listed above are their
genuine signatures.
CERTIFIED TO AND ATTEST BY:
x /s/ Craig L. Mathison
-----------------------------
x
-----------------------------
NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
================================================================================
<PAGE>
Exhibit 10(f)
(10f) being the Promissory Note for term financing between Web Press
Corporation and Washington First International Bank dated February 3,
1997.
<PAGE>
PROMISSORY NOTE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$975,000.00 02-03-1997 02-03-2001 8015480002 40 801548 305
- -------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- -------------------------------------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER Lender: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
=============================================================================================================
</TABLE>
PRINCIPAL AMOUNT: $975,000.00 INITIAL RATE: 10.250% DATE OF NOTE: FEBRUARY 3,
1997
PROMISE TO PAY. WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Borrower") promises to pay to Washington First International Bank ("Lender"),
or order, in lawful money of the United States of America, the principal amount
of Nine Hundred Seventy Five Thousand & 00/100 Dollars ($975,000.00), together
with interest on the unpaid principal balance from February 3, 1997, until paid
in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 48 payments of $24,837.56 each payment.
Borrower's first payment is due March 3, 1997, and all subsequent payments are
due on the same day of each month after that. Borrower's final payment will be
due on February 3, 2001, and will be for all principal and all accrued interest
not yet paid. Payments include principal and interest. Interest on this Note is
computed on a 365/365 simple interest basis; that is, by applying the ratio of
the annual interest rate over the number of days in a year, 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. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.
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 Lender's Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. 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 DAY. The Index currently is 8.250%
per annum. The interest rate to be applied to the unpaid principal balance of
this Note will be at a rate of 2.000 percentage points over the Index, resulting
in an initial rate of 10.250% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law. Whenever increases occur in the interest rate, Lender, at its option, may
do one or more of the following: (a) increase Borrower's payments to ensure
Borrower's loan will pay off by its original final maturity date, (b) increase
Borrower's payments to cover accruing interest, (c) increase the number of
Borrower's payments, and (d) continue Borrower's payments at the same amount and
increase Borrower's final payment.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. Except for the foregoing, 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 under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment of $15.00, whichever is greater.
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 comply with or to perform when
due any other term, obligation, covenant, or condition contained 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 either now or at the time made or furnished. (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) 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 account with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
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 7.000
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
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will 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 Washington. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of King County, the State of Washington. This Note shall be governed by
and construed in accordance with the laws of the State of Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
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.
<PAGE>
02-03-1997 PROMISSORY NOTE Page 2
(Continued)
================================================================================
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, 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 party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
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:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
----------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
----------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
LANDLORD'S CONSENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
02-03-1997 02-03-2001 8015480002 40 801548 305
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ---------------------------------------------------------------------------------------------------------
Borrower: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
=========================================================================================================
</TABLE>
THIS LANDLORD'S CONSENT IS ENTERED INTO AMONG WEB PRESS CORPORATION AND WEB
LEADER INTERNATIONAL, INC. ("BORROWER"), WHOSE ADDRESS IS BOTH LOCATED AT 22023
- - 68TH AVENUE SOUTH, KENT, WA 98032; WASHINGTON FIRST INTERNATIONAL BANK
("LENDER"), WHOSE ADDRESS IS 9709 THIRD AVENUE NORTHEAST, SUITE 110, SEATTLE, WA
98115; AND HALLISSEY RJ COMPANY, INC. ("LANDLORD"), WHOSE ADDRESS IS 12835
BELLEVUE-REDMOND ROAD, BELLEVUE, WA 98005. Borrower and Lender have entered
into, or are about to enter into, an agreement whereby Lender has acquired or
will acquire a security interest or other interest in the Collateral. Some or
all of the Collateral may be affixed or otherwise become located on the
Premises. To induce Lender to extend the Loan to Borrower against such
security interest in the Collateral and for other valuable consideration,
Landlord hereby agrees with Lender and Borrower as follows:
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 States of
America.
AGREEMENT. The word "Agreement" means this Landlord's Consent, as this
Landlord's Consent may be amended or modified from time to time, together
with all exhibits and schedules attached to this Landlord's Consent from
time to time.
BORROWER: The word "Borrower" means WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC..
COLLATERAL. The word "Collateral" means certain of Borrower's personal
property in which Lender has acquired or will acquire a security interest,
including without limitation the following specific property:
ALL INVENTORY, ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES AND FIXTURES,
INCLUDING BUT NOT LIMITED TO WHEREVER LOCATED
LANDLORD. The word "Landlord" means HALLISSEY RJ COMPANY, INC.. The term
"Landlord" is used for convenience purposes only. Landlord's interest in
the Premises may be that of a fee owner, lessor, sublessor or lienholder,
or that of any other holder of an interest in the Premises which may
be, or may become, prior to the interest of Lender.
LEASE. The word "Lease" means that certain lease of the Premises, dated
October 16, 1987, between Landlord and Borrower.
LENDER. The word "Lender" means Washington First International Bank, its
successors and assigns.
LOAN. The word "Loan" means the loan, or any other financial
accommodations, Lender has made or is making to Borrower.
PREMISES. The word "Premises" means the real property located in KING
County, State of Washington, commonly known as 22023 - 68TH AVE SOUTH,
KENT, WA 98032.
DISCLAIMER OF INTEREST. Landlord hereby consents to Lender's security interest
(or other interest) in the Collateral and disclaims all interests, liens and
claims which Landlord now has or may hereafter acquire in the Collateral.
Landlord agrees that any lien or claim it may now have or may hereafter have in
the Collateral will be subject at all times to Lender's security interest (or
other present or future interest) in the Collateral and will be subject to the
rights granted by Landlord to Lender in this Agreement.
ENTRY ONTO PREMISES. Landlord and Borrower grant to Lender the right to enter
upon the Premises for the purpose of removing the Collateral from the Premises
or conducting sales of the Collateral on the Premises. The rights granted to
Lender in this Agreement will continue until a reasonable time after Lender
receives notice in writing from Landlord that Borrower no longer is in lawful
possession of the Premises. If Lender enters onto the Premises and removes the
Collateral, Lender agrees with Landlord not to remove any Collateral in such a
way that the Premises are damages, without either repairing any such damage or
reimbursing Landlord for the cost of repair.
MISCELLANEOUS PROVISIONS. This Agreement shall extend to and bind the respective
heirs, personal representatives, successors and assigns of the parties to this
Agreement. The covenants of Borrower and Landlord respecting subordination of
the claim or claims of Landlord in favor of Lender shall extend to, include, and
be enforceable by any transferee or endorsee to whom Lender may transfer any
claim or claims to which this Agreement shall apply. Lender need not accept this
Agreement in writing or otherwise to make it effective. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington. If Landlord is other than an individual, any agent or other person
executing this Agreement on behalf of Landlord represents and warrants to Lender
that he or she has full power and authority to execute this Agreement on
Landlord's behalf. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is in writing and signed by Lender. Without
notice to Landlord and without affecting the validity of this Consent, Lender
may do or not do anything it deems appropriate or necessary with respect to the
Loan, any obligors on the Loan, or any Collateral for the Loan; including
without limitation extending, renewing, rearranging, or accelerating any of the
Loan indebtedness. 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 constitute a waiver of or
prejudice Lender's right otherwise to demand strict compliance with that
provision or any other provision. Whenever consent by Lender is required in this
Agreement, the granting of such consent by Lender in any one instance shall not
constitute continuing consent to subsequent instances where such consent is
required.
<PAGE>
02-03-1997 LANDLORD'S CONSENT PAGE 2
(CONTINUED)
================================================================================
BORROWER AND LANDLORD ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
LANDLORD'S CONSENT, AND BORROWER AND LANDLORD AGREE TO ITS TERMS. THIS AGREEMENT
IS DATED FEBRUARY 3, 1997.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
----------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
----------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
LANDLORD: LENDER:
HALLISSEY RJ COMPANY, INC. Washington First International Bank
By: /s/ Michael C C Lum
X________________________________ --------------------------------
Landlord's Signature Authorized Officer
================================================================================
<PAGE>
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$975,000.00 02-03-1997 02-03-2001 8015480002 40 801548 305
- ------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22203-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
====================================================================================================================================
</TABLE>
THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. (REFERRED TO BELOW AS "GRANTOR"); AND
WASHINGTON FIRST INTERNATIONAL BANK (REFERRED TO BELOW AS "LENDER). FOR VALUABLE
CONSIDERATION, GRANTOR GRANTS TO LENDER A SECURITY INTEREST IN THE COLLATERAL TO
SECURE THE INDEBTEDNESS AND AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN
THIS AGREEMENT WITH RESPECT TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS
WHICH LENDER MAY HAVE BY LAW.
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 States of
America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described property
of Grantor, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located:
All INVENTORY, ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES AND FIXTURES,
TOGETHER WITH THE FOLLOWING SPECIFICALLY DESCRIBED PROPERTY:
WHEREVER LOCATED
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral
section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of other
Grantor's rights, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
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 WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC., its successors and assigns
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together will all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents.
LENDER. The word "Lender" means Washington First International Bank, its
successors and assigns.
NOTE. The word "Note" means the note or credit agreement dated February 3,
1997, in the principal amount of $975,000.000 from WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. to Lender, together with all renewals
of, extensions of, modifications of, refinancings of, consolidations of and
substitutions for the note or credit agreement.
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.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor 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. Grantor authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
ORGANIZATION. Grantor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Washington.
Grantor has its chief executive office at BOTH LOCATED AT 22023 - 68TH
AVENUE SOUTH, KENT, WA 98032. Grantor will notify Lender of any change in
the location of Grantor's chief executive office.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
by Grantor have been duly authorized by all necessary action by Grantor 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 Grantor or (b)
any law, governmental regulation, court decree, or order applicable to
Grantor.
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon and all chattel paper if not delivered to Lender for
possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any
<PAGE>
02-03-1997 COMMERCIAL SECURITY AGREEMENT Page 2
(CONTINUED)
================================================================================
documents necessary to perfect or to continue the security interest granted in
this Agreement. Lender may at any time, and without further authorization from
Grantor, file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the continuation of the
perfection of Lender's security interest in the Collateral. Grantor promptly
will notify Lender before any change in Grantor's name including any change to
the assumed business names of Grantor.
NO VIOLATION. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or
condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is enforceable
in accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor of Lender,
the account shall be a good and valid account representing an undisputed, bona
fide indebtedness incurred by the account debtor, for merchandise held subject
to delivery instructions or theretofore shipped or delivered pursuant to a
contract of sale, or for services theretofore performed by Grantor with or for
the account debtor; there shall be no setoffs or counterclaims against any such
account; and no agreement under which any deductions or discounts may be claimed
shall have been made with the account debtor except those disclosed to Lender in
writing.
LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d) all
other properties where Collateral is or may be located. Except in the ordinary
course of its business, Grantor shall not remove the Collateral from its
existing locations without the prior written consent of Lender.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Washington, without the prior written consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor
is not in default under this Agreement, Grantor may sell inventory, but only in
the ordinary course of its business and only to buyers who qualify as a buyer in
the ordinary course of business. A sale in the ordinary course of Grantor's
business does not include a transfer in partial or total satisfaction of a debt
or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security interest, encumbrance,
or charge, other than the security interest provided for in this Agreement,
without the prior written consent of Lender. This includes security interests
even if junior in right to the security interests granted under this Agreement.
Unless waived by Lender, all proceeds from any disposition of the Collateral
(for whatever reason) shall be held in trust for Lender and shall not be
commingled with any other funds; provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.
COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles, Grantor
shall deliver to Lender schedules of such Collateral, including such information
as Lender may require, including without limitation names and addresses of
account debtors and agings of accounts and general intangibles. Insofar as the
Collateral consists of inventory and equipment, Grantor shall deliver to Lender,
as often as Lender shall require, such lists, descriptions, and designations of
such Collateral as Lender may require to identify the nature, extent, and
location of such Collateral. Such information shall be submitted for Grantor and
each of its subsidiaries or related companies.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release of any hazardous waste or
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 94-499 ("SARA"), the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or other applicable state or Federal laws,
rules, or regulations adopted pursuant to any of the foregoing. The terms
"hazardous waste" and "hazardous substance" shall also include, without
limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos. The representations and warranties contained herein are based on
Grantor's due diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims against
Lender for indemnity or contribution in the
<PAGE>
02-03-1997 COMMERCIAL SECURITY AGREEMENT PAGE 3
(CONTINUED)
================================================================================
event Grantor 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 and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
Indebtedness and the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days' prior written
notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including if it so
chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (a)
the name of the insurer; (b) the risks insured; (c) the amount of the
policy; (d) the property insured; (e) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (f) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral documents to create a valid and perfect security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor
<PAGE>
02-03-1997 COMMERCIAL SECURITY AGREEMENT PAGE 4
(CONTINUED)
================================================================================
dies or becomes incompetent. Lender, at its option, may, but shall not be
required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure the Event of Default.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within fifteen (15) days; or
(b), if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to product compliance as soon as
reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Washington Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
SELL THE COLLATERAL. Lender shall full power to sell, lease, transfer, or
otherwise deal with the Collateral or proceeds thereof in its own name or
that of Grantor. Lender may sell the Collateral at public auction or
private sale. Unless the Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any
other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the Collateral, shall become a part of the indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Collateral as Lender may determine, whether or not
Indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any remedy, and an election to make expenditures or to take
action to perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Lender's right to declare a
default and to exercise its 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
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender in the State of Washington. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of the
State of Washington. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
ATTORNEY'S FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorney's fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorney's fees and legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
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
<PAGE>
02-03-1997 COMMERCIAL SECURITY AGREEMENT PAGE 5
(CONTINUED)
================================================================================
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 parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to all Grantors. For
notice purposes, Grantor will keep Lender informed at all times of
Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the claim; and (d) to
file any claim or claims or to take any action or institute or take part in
any proceedings, either in its own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
preference claim in Borrower's bankruptcy will become a part of the
indebtedness and, at Lender's option, shall be payable by Borrower as
provided above in the "EXPENDITURES BY LENDER" paragraph.
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 finding 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, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on
transfer of the Collateral, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Grantor, shall constitute a waiver
of any of Lender's rights or of any of Grantor's obligations as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
indebtedness, Borrower irrevocably waives, disclaims and relinquishs all
claims against such other person which Borrower has or would otherwise have
by virtue of payment of the Indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contribution or
exoneration.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 3,
1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 801548 305
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
- ---------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
GUARANTOR: WAYNE R. MARCOUILLER
9140 SE 54TH STREET
MERCER ISLAND, WA 98040
=========================================================================================================
</TABLE>
AMOUNT OF GUARANTY. THIS IS A GUARANTY OF PAYMENT OF THE NOTE, INCLUDING
WITHOUT LIMITATION THE PRINCIPAL NOTE AMOUNT OF NINE HUNDRED SEVENTY FIVE
THOUSAND & 00/100 DOLLARS ($975,000.00).
GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, WAYNE R. MARCOUILLER
("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO
WASHINGTON FIRST INTERNATIONAL BANK ("LENDER") OR ITS ORDER, IN LEGAL TENDER OF
THE UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS DEFINED BELOW)
OF WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC. ("BORROWER") TO
LENDER ON THE TERMS AND CONDITIONS SET FORTH IN THIS GUARANTY.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty.
BORROWER. The word "Borrower" means WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC..
GUARANTOR. The word "Guarantor" means WAYNE R. MARCOUILLER.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated February 3, 1997.
INDEBTEDNESS. The word "Indebtedness" means the Note, including (a) all
principal, (b) all interest, (c) all late charges, (d) all loan fees and
loan charges, and (e) all collection costs and expenses relating to the
Note or to any collateral for the Note. Collection costs and expenses
include without limitation all of Lender's attorneys' fees and Lender's
legal expenses, whether or not suit is instituted, and 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.
LENDER. The word "Lender" means Washington First International Bank, its
successors and assigns.
NOTE. The word "Note" means the promissory note or credit agreement dated
February 3, 1997, IN THE ORIGINAL PRINCIPAL AMOUNT OF $975,000.00 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement.
RELATED DOCUMENTS. The words "Related Documents" means 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.
MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY
SHALL NOT EXCEED AT ANY ONE TIME THE AMOUNT OF THE INDEBTEDNESS DESCRIBED
ABOVE, PLUS ALL COSTS AND EXPENSES OF (A) ENFORCEMENT OF THIS GUARANTY AND
(B) COLLECTION AND SALE OF ANY COLLATERAL SECURING THE GUARANTY.
The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties. The liability
of Guarantor will be the aggregate liability of Guarantor under the terms of
this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all indebtedness within the limits set forth in
the preceding section of this Guaranty. Any married person who signs this
Guaranty hereby expressly agrees that recourse under this agreement may be had
against both his or her separate property and community property, whether now
owned or hereafter acquired.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness shall have
been fully and finally paid and satisfied and all other obligations to Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Lender from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, WITHOUT
NOTICE OR DEMAND AND WITHOUT LESSENING GUARANTOR'S LIABILITY UNDER THIS
GUARANTY, FROM TIME TO TIME: (A) TO MAKE ONE OR MORE ADDITIONAL SECURED OR
UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS TO BORROWER, OR
OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO ALTER, COMPROMISE,
RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR MORE TIMES THE TIME FOR
PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY PART OF THE INDEBTEDNESS,
INCLUDING INCREASES AND DECREASES OF THE RATE OF INTEREST ON THE INDEBTEDNESS;
EXTENSIONS MAY BE REPEATED AND MAY BE FOR LONGER THAN THE ORIGINAL LOAN TERM;
(C) TO TAKE AND HOLD SECURITY FOR THE PAYMENT OF THIS GUARANTY OR THE
INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE, SUBORDINATE, FAIL OR DECIDE NOT TO
PERFECT, AND RELEASE ANY SUCH SECURITY, WITH OR WITHOUT THE SUBSTITUTION OF NEW
COLLATERAL; (D) TO RELEASE, SUBSTITUTE, AGREE NOT TO SUE, OR DEAL WITH ANY ONE
OR MORE OF BORROWER'S SURETIES, ENDORSERS, OR OTHER GUARANTORS ON ANY TERMS OR
IN ANY MANNER lENDER MAY CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT APPLICATION
OF PAYMENTS AND CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO APPLY SUCH
SECURITY AND DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING WITHOUT
LIMITATION, ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE CONTROLLING
SECURITY AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION MAY DETERMINE;
(G) TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR ANY PART OF THE
INDEBTEDNESS; AND (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN WHOLE OR IN PART.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (f) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information
<PAGE>
02-03-1997 COMMERCIAL GUARANTY PAGE 2
(CONTINUED)
================================================================================
which currently has been, and all future financial information which will be
provided to Lender is and will be true and correct in all material respects and
fairly present the financial condition of Guarantor as of the dates the
financial information is provided; (g) no material adverse change has occurred
in Guarantor's financial condition since the date of the most recent financial
statements provided to Lender and no event has occurred which may materially
adversely affect Guarantor's financial condition; (h) no litigation, claim,
investigation, administrative proceeding or similar action (including those for
unpaid taxes) against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to pursue
any other remedy within Lender's power; or (f) to commit any act or omission of
any kind, or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, 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 have or 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.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; which
destroys or otherwise adversely affects Guarantor's subrogation rights or
Guarantor's rights to proceed against Borrower for reimbursement, including
without limitation, any loss of rights Guarantor may suffer by reason of any law
limiting, qualifying, or discharging the Indebtedness; (c) any disability or
other defense of Borrower, of any other guarantor, or of any other person, or by
reason of the cessation of Borrower's liability from any cause whatsoever, other
than payment in full in legal tender, of the Indebtedness; (d) any right to
claim discharge of the Indebtedness of the basis of unjustified impairment of
any collateral for the Indebtedness; (e) any statute of limitations, if at any
time any action or suit brought by Lender against Guarantor is commenced there
is outstanding Indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations; or (f) any defenses given to guarantors at
law or in equity other than actual payment and performance of the Indebtedness.
If payment is made by Borrower, whether voluntarily or otherwise, or by any
third party, on the Indebtedness and thereafter Lender is forced to remit the
amount of that payment to Borrower's trustee in bankruptcy or to any similar
person under any federal or state bankruptcy law or law for the relief of
debtors, the indebtedness shall be considered unpaid for the purpose of
enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Guarantor hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of Guarantor's
right, title and Interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to exercise
such right of setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full force
and effect until such right of setoff or security interest is specifically
waived or released by an instrument in writing executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an 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 indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy or Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Guaranty. No alteration of or amendment to this Guaranty
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Guarantor agrees
upon Lender's request to submit to the jurisdiction of the courts of King
County, State of Washington. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Washington.
ATTORNEY'S FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Guaranty.
Lender may pay someone else to help enforce this Guaranty, and
<PAGE>
02-03-1997 COMMERCIAL GUARANTY PAGE 3
(Continued)
================================================================================
Guarantor shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender's attorney fees and legal expenses whether or not
there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Guarantor also shall pay all court costs and such
additional fees as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile, and
shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier, or when 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 or to such other
addresses as either party may designate to the other in writing. If there
is more than one Guarantor, notice to any Guarantor will constitute notice
to all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the
words "Borrower" and "Guarantor" respectively shall mean all and any one or
more of them. The words "Guarantor," "Borrower," and "Lender" include the
heirs, successors, assigns, and transferees of each of them. Caption
headings in this Guaranty are for convenience purposes only and are not to
be used to interpret or define the provisions of this Guaranty. If a court
of competent jurisdiction finds any provision of this Guaranty to be
invalid or unenforceable as to any person or circumstance, such finding
shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower
or Guarantor are corporations or partnerships, it is not necessary for
Lender to inquire into the powers of Borrower or Guarantor or of the
officers, directors, partners, or agents acting or purporting to act on
their behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have any rights under this Guaranty
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 Guaranty 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 Guaranty. No prior waiver by Lender, nor any course
of dealing between Lender and Guarantor, shall constitute a waiver of any
of Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be grated or withheld in the
sole discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED FEBRUARY 3, 1997.
GUARANTOR:
x /s/ Wayne R Marcouiller
--------------------------
WAYNE R. MARCOUILLER
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$975,000.00 02-03-1997 02-03-2001 8015480002 40 801548 305
- ------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
=======================================================================================================
</TABLE>
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. (THE "CORPORATION"), HEREBY CERTIFY THAT the
Corporation is organized and existing under and by virtue of the laws of the
State of Washington as a corporation for profit, with its principal office at
BOTH LOCATED AT 22023 - 68TH AVENUE SOUTH, KENT, WA 98032, and is duly
authorized to transact business in the State of Washington.
I FURTHER CERTIFY that a meeting of the Directors of the Corporation, duly
called and held ON FEBRUARY 3, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
<S> <C> <C>
GARY B. PALMER General Manager: WEB PRESS CORPORATION /s/ Gary B. Palmer
----------------------------
GARY B. PALMER Chairman: WEB LEADER INTERNATIONAL, INC. /s/ Gary B. Palmer
----------------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Washington First
International Bank ("Lender"), on such terms as may be agreed upon between
the Corporation and Lender, such sum or sums of money as in their judgment
should be borrowed, without limitation.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any Indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accomodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times, and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
they may in their discretion deem reasonably necessary or proper in
connection with or pertaining to the giving of the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE>
02-03-1997 CORPORATE RESOLUTION TO BORROW PAGE 2
(CONTINUED)
================================================================================
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON FEBRUARY 3, 1997 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X /s/ Craig L. Mathison
-----------------------------
X_____________________________
NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
================================================================================
<PAGE>
WHEN RECORDED RETURN TO:
WASHINGTON FIRST INTERNATIONAL BANK
9709 THIRD AVENUE NORTHEAST
SUITE 110
SEATTLE, WA 98115
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
WASHINGTON UCC-2 COUNTY AUDITOR FIXTURE FILING
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Debtor(s): (last name first, and 2. Secured Party(ies) and address(es): 3. Assignee(s) of Secured Party(ies):
mailing address(es))
WEB PRESS CORPORATION AND WEB WASHINGTON FIRST INTERNATIONAL
LEADER INTERNATIONAL, INC. TIN: BANK
910851298 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH SUITE 110
AVENUE SOUTH SEATTLE, WA 98115
KENT, WA 98032
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS FIXTURE FILING SHALL COVER COLLATERAL THAT IS AFFIXED TO THE FOLLOWING
DESCRIBED PROPERTY.
Reference Number:________________________
Legal Description: Additional on page:______
THIS FIXTURE FILING COVERS THE FOLLOWING DESCRIBED PROPERTY
ALL FIXTURES; WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS RELATING TO ANY OF THE
FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING; ALL
PROCEEDS RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
INTANGIBLES, AND ACCOUNTS PROCEEDS), TOGETHER WITH THE FOLLOWING SPECIFICALLY
DESCRIBED PROPERTY: WHEREVER LOCATED
4. [X] The debtor is the record owner.
- --------------------------------------------------------------------------------
5. This statement is signed by the Secured Party(ies) instead of the Debtor(s)
to perfect a security interest in collateral: (Please check appropriate box)
(a) [_] already subject to security interest in another jurisdiction when
it was brought into this state, or when the debtor's location was
changed to this state, or
(b) [_] which is proceeds of the original collateral described above in
which a security interest was perfected, or
(c) [_] as to which the recording has lapsed, or
(d) [_] acquired after a change of name, identity, or corporate structure
of the debtor(s).
- --------------------------------------------------------------------------------
6. Complete fully if box (d) is checked:
complete as applicable for (a), (b), and (c):
Original recording number__________________________
Office where recorded______________________________
Former name of debtor(s)___________________________
___________________________________________________
- --------------------------------------------------------------------------------
Dated_________________________, 19_______.
GARY B. PALMER, GENERAL MANAGER: WEB PRESS
CORPORATION AND GARY B. PALMER, CHAIRMAN:
WEB LEADER INTERNATIONAL, INC. WASHINGTON FIRST INTERNATIONAL BANK
- --------------------------------------- ------------------------------------
TYPE NAME(S) OF DEBTOR(S) (or assignor(s)) TYPE NAME(S) OF SECURED PARTY(IES)
(or assignee(s))
/s/ Gary B. Palmer
- --------------------------------------- ____________________________________
SIGNATURE(S) OF DEBTOR(S) (or assignor(s)) SIGNATURE(S) OF SECURED PARTY(IES)
(or assignee(s))
COPY 3 - FILE COPY - SECURED PARTY FORM APPROVED FOR USE IN THE STATE
OF WASHINGTON
<PAGE>
WHEN RECORDED RETURN TO:
WASHINGTON FIRST INTERNATIONAL BANK
9709 THIRD AVENUE NORTHEAST
SUITE 110
SEATTLE, WA 98115
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON UCC-2 COUNTY AUDITOR FIXTURE FILING
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Debtor(s): (last name first, and mailing address(es)) 2. Secured Party(ies) and address(es): 3.Assignee(s) of Secured Party(ies):
WEB PRESS CORPORATION AND WEB WASHINGTON FIRST INTERNATIONAL
LEADER INTERNATIONAL, INC. TIN: BANK
910851298 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH SUITE 110
AVENUE SOUTH SEATTLE, WA 98115
KENT, WA 98032
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS FIXTURE FILING SHALL COVER COLLATERAL THAT IS AFFIXED TO THE FOLLOWING
DESCRIBED PROPERTY.
Reference Number:______________________________ Additional on page:________
Legal Description:
THIS FIXTURE FILING COVERS THE FOLLOWING DESCRIBED PROPERTY
ALL FIXTURES; WHETHER ANY OF THE FOREGOING IS OWNED NOW OF ACQUIRED LATER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS RELATING TO ANY OF THE
FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING; ALL
PROCEEDS RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
INTANGIBLES, AND ACCOUNTS PROCEEDS), TOGETHER WITH THE FOLLOWING SPECIFICALLY
DESCRIBED PROPERTY: WHEREVER LOCATED
4. [X] The debtor is the record owner.
- -------------------------------------------------------------------------------
5. This statement is signed by the Secured Party(ies) instead of the Debtor(s)
to perfect a security interest in collateral: (Please check appropriate box)
(a) [_] already subject to security interest in another jurisdiction when it
was brought into this state, or when the debtor's location was
changed to this state, or
(b) [_] which proceeds of the original collateral described above in which a
security interest was perfected, or
(c) [_] as to which the recording has lapsed, or
(d) [_] acquired after a change of name, identity, or corporate structure of
the debtor(s).
- -------------------------------------------------------------------------------
6. Complete fully if box(d) is checked:
complete as applicable for (a), (b), and (c);
Original recording number__________________________________
Office where recorded_____________________________________
Former name of debtor(s)__________________________________
__________________________________________________________
- -------------------------------------------------------------------------------
Dated________________________________, 19______________.
GARY B. PALMER, GENERAL MANAGER: WEB PRESS
CORPORATION AND GARY B. PALMER, CHAIRMAN: WEB
LEADER INTERNATIONAL, INC.
WASHINGTON FIRST INTERNATIONAL BANK
- -------------------------------------- ------------------------------------
TYPE NAME(S) OF DEBTOR(S)(or assignor(s)) TYPE NAME(S) OF SECURED PARTY(IES)
(or assignee(s))
/s/ Gary B. Palmer
- -------------------------------------- _____________________________________
SIGNATURE(S) OF DEBTOR(S)(or assignor(s)) SIGNATURE(S) OF SECURED PARTY(IES)
(or assignee(s))
COPY 2 - FILE COPY - DEBTOR FORM APPROVED FOR USE IN THE STATE OF WASHINGTON
<PAGE>
WHEN RECORDED RETURN TO:
WASHINGTON FIRST INTERNATIONAL BANK
9709 THIRD AVENUE NORTHEAST
SUITE 110
SEATTLE, WA 98115
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON UCC-2 COUNTY AUDITOR FIXTURE FILING
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Debtor(s): (last name first, and mailing address(es)) 2. Secured Party(ies): address(es): 3. Assignee(s) of Secured Party(ies):
WEB PRESS CORPORATION AND WEB WASHINGTON FIRST INTERNATIONAL
LEADER INTERNATIONAL, INC. TIN: BANK
910851298 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 - 68TH SUITE 110
AVENUE SOUTH SEATTLE, WA 98115
KENT, WA 98032
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS FIXTURE FILING SHALL COVER COLLATERAL THAT IS AFFIXED TO THE FOLLOWING
DESCRIBED PROPERTY.
Reference Number:_____________________
Legal Description: Additional on page:_____
THIS FIXTURE FILING COVERS THE FOLLOWING DESCRIBED PROPERTY
ALL FIXTURES; WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS RELATING TO ANY OF THE
FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING; ALL
PROCEEDS RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL
INTANGIBLES, AND ACCOUNTS PROCEEDS), TOGETHER WITH THE FOLLOWING SPECIFICALLY
DESCRIBED PROPERTY: WHEREVER LOCATED
4. [X] The debtor is the record owner.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
5. This statement is signed by the Secured Party(ies)instead of the Debtor(s) to 6. Complete fully if box(d) is checked:
perfect a security interest in collateral: (Please check appropriate box) complete as applicable for(a), (b), and (c):
(a) [_] already subject to security interest in another jurisdiction when it Original recording number____________________
was brought into this state, or when the debtor's location was
changed to this state, or
(b) [_] which is proceeds of the original collateral described above in Office where recorded________________________
which a security interest was perfected, or
(c) [_] as to which the recording has lapsed, or Former name of debtor(s)_____________________
(d) [_] acquired after a change of name, identity, or corporate structure of
the debtor(s). _____________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Dated____________________________, 19________.
<TABLE>
<S> <C>
GARY B. PALMER, GENERAL MANAGER: WEB PRESS
CORPORATION AND GARY B. PALMER, CHAIRMAN: WEB
LEADER INTERNATIONAL, INC. WASHINGTON FIRST INTERNATIONAL BANK
- --------------------------------------------- ---------------------------------------------------------------
TYPE NAME(S) OF DEBTOR(S)(or assignor(s)) TYPE NAME(S) OF SECURED PARTY(IES)(or assignee(s))
/s/ Gary B. Palmer
- --------------------------------------------- _______________________________________________________________
SIGNATURE(S) OF DEBTOR(S) or assignor(s)) SIGNATURE(S) OF SECURED PARTY(IES) (or assignee(s))
COPY 1 - COUNTY AUDITOR FORM APPROVED FOR USE IN THE STATE OF WASHINGTON
</TABLE>
<PAGE>
AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$975,000.00 02-03-1997 02-03-2001 8015480002 40 801548 305
- -----------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only do not limit the applicability of this document
to any particular loan or item.
- -----------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023 0 68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
===========================================================================================================
</TABLE>
INSURANCE REQUIREMENTS. WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Grantor") understands that insurance coverage is required in connection with
the extending of a loan or the providing of other financial accommodations to
Grantor by Lender. These requirements are set forth in the security documents.
The following minimum insurance coverages must be provided on the following
described collateral (the "Collateral"):
COLLATERAL: ALL INVENTORY, EQUIPMENT AND FIXTURES, INCLUDING WHEREVER
LOCATED.
TYPE. All risks, including fire, theft and liability.
AMOUNT. Full insurable value.
BASIS. Replacement value.
ENDORSEMENTS. Lender's loss payable clause with stipulation
that coverage will not be cancelled or diminished without a
minimum of ten (10) days' prior written notice to Lender.
DEDUCTIBLES. $1,000.00.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on or before
closing, evidence of the required insurance as provided above, with an effective
date of February 3, 1997, or earlier. Grantor acknowledges and agrees that if
Grantor fails to provide any required insurance or fails to continue such
insurance in force. Lender may do so at Grantor's expense as provided in the
applicable security document. The cost of any such insurance, at the option of
Lender, shall be payable on demand or shall be added to the indebtedness as
provided in the security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO
PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION
AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN;
HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE
INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 3, 1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, GENERAL MANAGER: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, CHAIRMAN: WEB LEADER INTERNATIONAL, INC.
===============================================================================
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE:________________ PHONE:___________
AGENT'S NAME:________________________________
INSURANCE COMPANY:____________________________________________________
POLICY NUMBER:________________________________________________________
EFFECTIVE DATES:______________________________________________________
COMMENTS:_____________________________________________________________
--------------------------------------------------------------------------
===============================================================================
===============================================================================
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$975,000.00 02-03-1997 02-03-2001 8015480002 40 801548 305
- -----------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only do not limit the applicability of this document to
any particular loan or item.
- -----------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
BOTH LOCATED AT 22023--68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
===========================================================================================================
</TABLE>
LOAN TYPE. This is a Variable Rate (2.000% over WASHINGTON FIRST INTERNATIONAL
BANK PRIME RATE, making an initial rate of 10.250%). Installment Loan to a
Corporation for $975,000.00 due on February 3, 2001.
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: REFINANCE OF TERM LOAN.
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 $975,000.00 as follows:
<TABLE>
<S> <C>
AMOUNT PAID TO OTHERS ON BORROWER'S BEHALF: $967,803.50
$967,803.50 Loan Proceeds
OTHER CHARGES FINANCED: $ 186.50
$24.00 Recording - UCC 1 Financing Stmt
$ 9.00 Recording - UCC 2 Fixture Filing
$50.50 UCC Lien Search
$28.00 UCC Post Search
$75.00 Dun and Bradstreet Credit Report
TOTAL FINANCED PREPAID FINANCE CHARGES: $ 7,010.00
$7,010.00 Loan Fees
------------
NOTE PRINCIPAL: $975,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
PREPAID FINANCE CHARGES PAID IN CASH: $ 2,740.00
$2,740.00 Loan Fees
------------
TOTAL CHARGES PAID IN CASH: $ 2,740.00
</TABLE>
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 IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED FEBRUARY 3, 1997.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, GENERAL MANAGER: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, CHAIRMAN WEB: LEADER INTERNATIONAL, INC.
================================================================================
Variable Rate, Installment. LASER PRO. Reg. U.S. Pat. & T.M. Off., Ver.
3.23(c) 1997 CFI ProServices, Inc. All rights
reserved. [WA-120 WEBLOC.LN]
<PAGE>
EXHIBIT 10G
(10g) being the Business Loan Agreement between Web Press Corporation and
Washington First International Bank and the Export Working Capital
Guarantee of the Small Business Administration dated February 20, 1997.
<PAGE>
SMALL BUSINESS ADMINISTRATION
SEATTLE DISTRICT OFFICE
-----------------------
1200 SIXTH AVE., SUITE 1700
---------------------------
SEATTLE, WA 98101-1128
----------------------
(Address)
AUTHORIZATION AND LOAN AGREEMENT
--------------------------------
(GUARANTY LOANS)
Guaranty Participation LOAN NO.: EWCP 987816-30-00 SEA
-----------------
WASHINGTON FIRST INTERNATIONAL BANK
- -----------------------------------
(Lender)
9709 Third Ave. N.E.
-------------------
Seattle, WA 98115-2015
----------------------
(Address, include ZIP code)
Attn: Mr. Michael C. C. Lum, Vice President
-------------------------------------------
Your request dated October 17, 1996 for SBA to Guarantee 75% of a 12 month Loan
-- --
in the amount of $ 1,000,00 to be made by Lender to:
--------
Web Press Corporation
---------------------
and
Web Leader International, Inc.
------------------------------
(Name and Address of Borrower)
22203 68th Ave. South
---------------------
Kent, WA 98032
--------------
is hereby approved pursuant to Section 7(a) of the Small Business Act, as
amended.
1. THE FOLLOWING FORMS ARE HEREWITH ENCLOSED:
(a) Original SBA note to be executed by the Borrower and retained by you.
The Guaranty fee of 1/4 of one % of the amount guaranteed ($1,875)
------------ -----
shall be paid by the lender within fifteen (15) calendar days from the
date of this Authorization. The Lender may charge the Borrower for
such fee only after the Lender has paid the fee and an initial
disbursement has been made on the Loan. The fee may be deducted from
loan proceeds.
(b) Original SBA Settlement Sheet, Form 1050, is to be completed and
executed by Lender and Borrower at first disbursement. Original
settlement sheet should remain in Lender's file.
(c) Compensation Agreement (SBA Form 159) shall be executed by Borrower,
its representative and Lender and returned to SBA only if fees exceed
$1,000.00. If no such fees have been charged, please write "None" and
retain the form, executed by the Lender and Borrower, in Lender's
file.
(d) The original copy of this Authorization, all closing documents and
documents itemized below shall be executed prior to first disbursement
and retained in loan file by the Lender. (A copy of
<PAGE>
the Authorization and all documents should be given to the
Borrower.)
Note
Security Agreement
Assignment of Proceeds of Letters of Credit
Assignment of proceeds on freight/marine shipping insurance
UCC-1 (Financing Statement)
UCC-11R (Lien Search)
Personal Guarantee
Tax Verification with IRS
Resolution of Board of Directors of Borrower corporations
2. THIS AUTHORIZATION IS SUBJECT TO:
(a) Provisions of the Guaranty Agreement, SBA Form 750EX, between
lender and SBA, dated December 11, 1995.
-----------------
(b) No disbursement of this Loan shall be made beyond the maturity
date established below, unless such time is extended pursuant to
prior written consent of SBA.
(c) Receipt by Lender of evidence satisfactory to it in its sole
discretion, that there has been no unremedied adverse change
since the date of the Lender's Application for Guaranty, or since
any of the preceding disbursements, in the financial or any other
condition of Borrower, which would warrant withholding or not
making any such disbursement or any further disbursement.
(d) The representations made by Borrower in the loan application, the
requirements or conditions set forth in Lender's application
form, including the supporting documents thereto, the conditions
set forth herein and any future conditions imposed by Lender
(with prior SBA approval).
(e) In the event that a creditor of the Borrower other than the
Lender has a prior security interest in the export-related
inventory and/or export receivables to be financed by this Loan,
the Lender shall enter into a written agreement with the Borrower
and other such creditor providing for the subordination of such
other creditor's security interest in the collateral so that the
Lender shall have a valid and enforceable, first priority
security interest in the applicable collateral.
(f) Lender agrees to pay on ongoing guaranty fee equal to one half of
one percent (0.5%) per annum of the guaranty portion of the
outstanding balance. This fee shall be paid by the lender
following the receipt of an interest payment from the borrower.
The fee may not be charged to the borrower and shall be received
by the SBA-designated fiscal and transfer agent by the third day
of the month (or the next business day thereafter, if the third
is not a business day), following receipt of a scheduled payment.
There is a two business day grace period after the due date.
Lender agrees to report the status of all of its SBA guaranteed
loans on a monthly basis using SBA Form 1502 or an acceptable
electronic format.
3. TERMS OF LOAN:
(a) Repayment Term, Interest Rate and Maturity.
(1) Repayment terms contained in the executed SBA Form 147 Note
shall conform to the following paragraphs:
Borrower shall pay (from proceeds of financed transactions)
2
<PAGE>
ON DEMAND, or if no demand, then on or before twelve (12) months
-----------
from the date of this Note the total principal amounts advanced
by Lender from time to time, plus interest as herein provided. No
advance shall be made under this Note if, as a result of such
advance, the total principal amount outstanding hereunder would
exceed the sum of $1,000,000.
---------
THIS IS A VARIABLE INTEREST RATE NOTE. Interest on each principal
advance shall accrue at one and one-half percent (1.50%) per
annum above the Lending Bank's publicly announced prime rate of
interest ("Prime Rate"). The initial rate is nine and three
quarters percent (9.75%) per annum, payable monthly beginning one
-----
month from date of Note. Each change in interest rate shall be
effective on the date of each announced change in the Bank's
Prime Rate.
If the Borrower shall be in default in payment due on the
indebtedness herein and the Small Business Administration (SBA)
purchases its guaranteed portion of said indebtedness, the rate
of interest on both the guaranteed and unguaranteed portion
herein shall become fixed at the rate in effect as of the first
date of uncured default. If the Borrower shall not be in default
in payment when SBA purchases its guaranteed portion, the rate of
interest on both the guaranteed and unguaranteed portion shall be
fixed at the rate in effect as of the date of purchase by SBA.
(2) Expiration Date for Final Disbursement: Lender shall decline any
advances where repayment from letter of credit proceeds would be
after the loan maturity date, except when a Lender/SBA approved
re-issuance of this line of credit allows for debt rollover.
Lender shall notify SBA of the date of the Note. Lender may
require interim "clean-up" periods.
(3) LINE OF CREDIT: This loan is a revolving line of credit based on
a Series of transactions with related letter of credit orders
acceptable to Lender. Borrower agrees to be liable for all sums
credited to any of Borrower's accounts with Lender. The unpaid
principal balance owing on this Note at any time may be evidenced
by endorsements on this Note or by Lender's internal records,
including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or
any guarantor is in default under the terms of this Note or any
agreement that Borrower 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) Borrower
or any guarantor seeks, claims, or otherwise attempts to limit,
modify or revoke such Borrower's or guarantor's liability under
the Note or guaranty with respect to this or any other loan with
lender; or (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender.
Any amounts due under this Note may be paid prior to maturity or
demand without penalty or notice.
(b) Use of proceeds to be covered by guarantee:
(1) Pre- Shipment Working Capital - Cash amount not to exceed
-----------------------------
$1,000,000 to be disbursed against letters of Credit acceptable
----------
to Lender to provide working capital for the production of
printing presses for export. Proceeds to be
3
<PAGE>
credited to Borrower's account with Lender.
(2) Revolving Preshipment Loan Advances - Disbursements against
-----------------------------------
valid, acceptable export trade related irrevocable letters of
credit valued greater than the total of all its specific
transaction-related advances may be made for the Borrower's cost
of goods (materials and labor) of the product being exported
minus any downpayment received and limited to no more than 70% of
the contract sales price minus any downpayment received. For each
advance, documentation to the Lender must be provided which
details the cost of materials and labor incurred related to the
transaction. Before any funds can be advanced, all downpayments
received on the order must first be fully expended for materials
and labor on the related transaction and documentation provided
to Lender detailing full usage of the downpayment.
(c) Collateral:
(1) Perfected First Security Interest in export inventory, accounts
receivable and the contract rights now owned and hereafter
acquired, associated with the transactions on which disbursements
under this loan are based and made. UCC searches are required.
To the extent possible, "export inventory" shall mean all of
Borrower's inventory which is intended to be sold pursuant to
export orders. Unless the export inventory can be effectively
segregated, for purposes of claim recoveries, the export
inventory will be determined on a pro-rata basis comparing as of
the date of default the amount outstanding under the Loan with
the aggregate amount outstanding under all other short-term
inventory financing of the Borrower.
(2) Assignment of proceeds of export letters of credit associated
with the transactions on which disbursements of this loan are
based and made.
(3) Assignment of proceeds on any freight/marine insurance required
if under CIF (Costs, Insurance & Freight) terms of shipment of
financed products or assignment of a comprehensive insurance
policy covering all such shipping risks, with Lender being named
loss payee.
(4) Personal Guaranty on SBA Form 148 of Mr. Wayne R. Marcouiller.
------------------------
(d) Additional Requirements:
(1) SBA Form 160, Resolution of Board of Directors of Borrower
corporations.
(2) A Certified copy of the properly recorded Articles of
Incorporation and any amendments thereto, and a copy of the
By-Laws.
4. To further induce Lender to make and SBA to guarantee this Loan,
Lender and SBA impose the following conditions:
(a) Reimbursable Expenses - Borrower will, on demand, reimburse
---------------------
Lender for any and all expenses incurred, or which may be
hereafter incurred, by Lender from time to time in connection
with or by reason of Borrower's application for, the making and
administration of the Loan.
4
<PAGE>
(b) Books, Records, and Reports - Borrower will at all times keep proper
---------------------------
books of account in a manner satisfactory to Lender and/or SBA.
Borrower hereby authorizes Lender or SBA to make or cause to be made,
at Borrower's expense and in such manner and at such times as Lender
or SBA may require, (a) inspections and audits of any books, records
and papers in the custody or control of Borrower or others, relating
to Borrower's financial or business condition, including the making of
copies thereof and extracts therefrom, and (b) inspections and
appraisals of any of borrower's assets. Borrower will furnish to
Lender and SBA Borrower's financial and operating statements as may be
required by SBA or Lender. Borrower hereby authorizes all Federal,
State and municipal authorities to furnish reports of examinations,
records, and other information relating to the conditions and affairs
of borrower and any desired information from reports, returns, files,
and records of such authorities upon request therefore by Lender or
SBA.
(c) Borrower shall not execute any contracts for management consulting
services without prior approval of Lender and SBA.
(d) Distribution and Compensation - Borrower will not, without the prior
-----------------------------
consent of Lender or SBA (a) if borrower is a corporation, declare or
pay any dividend or make any distribution upon its capital stock, or
purchase or retire any of its capital stock, or consolidate, or merge
with any other company, or give any preferential treatment, make any
advance, directly or indirectly, by way of loan, gift, bonus, or
otherwise, to any company directly or indirectly controlling or
affiliated with or controlled by Borrower, or any other company, or to
any officer, director or employee of Borrower, or of any such company,
(b) if Borrower is a partnership or individual, make any distribution
of assets of the business of borrower, other than reasonable
compensation for services, or give any preferential treatment, make
any advance, directly or indirectly, by way of loan, gift, bonus, or
otherwise, to any partner or any of its employees, or to any company
directly or indirectly controlling or affiliated with or controlled by
Borrower, or any other company.
(e) Other provisions:
( 1 ) Multiple draws and repayments are authorized as long as the
--- outstanding balance does not exceed the stated line of credit.
( 2 ) The Borrower shall require payment in U.S. Dollars unless SBA
--- otherwise agrees in writing.
( 3 ) The Borrower will secure all documentation necessary to
--- establish an enforceable obligation against the buyer. This
includes, but is not limited to, a signed or otherwise
verifiable purchase order or contract, bills of lading or other
necessary transportation documents, and a commercial invoice. A
copy of confirmed orders, contracts, etc., with all amendments,
if any, shall be submitted to the lender for review and
approval.
( 4 ) Borrower to deliver the original letters of credit and all
--- amendments thereto to Lender together with instructions to
negotiate same on Borrower's behalf. Borrower to provide an
assignment of proceeds to the Lender for each letter of credit,
which will be the basis for the loan disbursements. All letters
of credit proceeds are to be deposited to a Bank Control
account. Borrower shall provide the Lender with
5
<PAGE>
irrevocable instructions to apply the proceeds of the letters of
credit to the loan. All documents submitted hereunder shall be
kept on file by the lender with copies provided to SBA on
request.
( 5 ) A copy of the final signed sales contract(s) for export trade
--- with all amendments, if any, and a copy of the related letters of
credit with all amendments, if any, must be submitted to Lender
for review and approval for being acceptable as the basis for
loan disbursements. Before any funds can be advanced, all
downpayments received on the order must first be fully expended
for materials and labor on the related transaction and
documentation provided to Lender detailing downpayments received
and full usage of the downpayment.
( 6 ) Country Limitations - The Small Business Administration's loan
--- -------------------
guarantee is generally extended only for exports to countries
open to The Export-Import Bank of the United States (Eximbank)
coverage as noted in Eximbank's Country Limitation Schedule.
------- ---------- ---------
Variance from the Country Limitation Schedule if not prohibited
------- ---------- --------
by U.S. law, generally is permitted only if the payment method is
by letter of credit confirmed by a bank acceptable to the Lender
or SBA.
For example, prior to making any disbursements related to the
Fundatia "Romania de Maine" order, Borrower will have provided
Lender with a copy of an irrevocable Letter of Credit relative to
the order, together with confirmation by a bank acceptable to
Lender or SBA, preferrably a bank located in the U.S.
( 7 ) Borrower shall provide full marine/freight insurance on each and
--- every export shipment financed under this line if under CIF
(Costs, Insurance & Freight) terms of shipment, or a
comprehensive insurance policy covering such risks, with Lender
designated as the loss payee under said policy.
( 8 ) Borrower must furnish Lender a progress report on at least a
--- quarterly basis in form satisfactory to Lender during the term of
the loan to include financial statement and actual monthly sales
statements and actual cash flow statements with comparison to
their respective sales and cash flow projection statements.
( 9 ) Borrower will not establish any new credit facilities or
--- accomplish any major debt restructuring; make any capital
investment; accelerate payment of existing debt; undertake any
bulk sale of assets; make payments of principal outstanding under
any loans, either now or hereafter existing, made between a
stockholder and the borrower; or make principal payments on any
debt which under the terms of this Agreement will be
subordinated, without the prior written approval of SBA and the
Lender.
( 10 ) Borrower shall issue and sign a letter to Lender stating that a
---- validated export license is not required, citing the authority
export license is not required, citing the authority for such
statement, together with prior experience on identical product,
if available.
( 11 ) Borrower must be current on all payroll taxes and have in
---- operation a depository plan for the payment of future withholding
taxes.
( 12 ) Agreement by Lender to execute any right of offset available
----
6
<PAGE>
in the event of a default by the Borrower. All funds received
are to be applied to the outstanding loan balance prior to
requesting that SBA honor its guaranty.
(13) Borrower to display SBA Form 722, Equal Opportunity Poster, at
his place of business, where it is clearly visible to employees,
applicants for employment, and the general public.
(14) Hazard Insurance in such amounts and for such coverages as shall
be satisfactory to Lender, and must contain a mortgagee loss
payee clause similar in character to the New York Standard
Mortgagee Clause.
(15) Borrower shall not change ownership or control and shall not
reorganize or change its name or form of organization without the
prior written consent of the Lender/SBA. Failure to obtain prior
written consent shall constitute default and authorizes
Lender/SBA to declare all or any part of the indebtedness
immediately due and payable.
(16) Guarantor hereby waives and relinquishes any right of subrogation
or other right of reimbursement from the Debtor or the Debtor's
estate and any other right to payment from the Debtor or the
Debtor's estate arising out of or on account of any sums paid or
agreed to be paid by Guarantor under this Guaranty, whether any
such right is reduced to judgement, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(17) Lender shall provide SBA a photocopy of Lender's disbursement
activity record for each calendar quarter of this loan (dates of
disbursements and respective dollar amounts disbursed for each
loan advance), sent to SBA Officer located at the U.S. Export
Assistance Center, 2001 Sixth Avenue, Suite 650, Seattle, WA
98121 within 15 days following the end of each calendar quarter
through the calendar quarter when this loan matures.
(18) The Borrower agrees, to the extent feasible, to purchase only
American made products with the proceeds of this loan.
(19) Borrower certifies that no principal who owns at least 50% of the
voting interest of the company is delinquent more than 60 days
under the terms of any (a) administrative order, (b) court order,
or (c) repayment agreement that requires payment of child
support.
(20) Prior to any disbursement, Borrower must execute IRS Form 4506
(authorizing IRS to send the Borrower's transcript of tax returns
on record), and Lender must submit said completed form to the
appropriate Internal Revenue Service Office. Before any
disbursement, Lender must verify transcripts with financial
information submitted with the application and certify that no
adverse change has taken place.
(21) Lender shall provide SBA with a CROSS DEFAULT CLAUSE. Any default
on Borrower's non-SBA loan(s) with Lender shall be considered an
event of default on this loan as well.
(22) Lender shall provide SBA with a CROSS CONTINUANCE CLAUSE. If
Lender does not renew the export working capital line of credit,
at maturity of this facility, twelve months from the
7
<PAGE>
date of Note, then SBA will not renew its guarantee
participation. Lender should process its request to renew the
export working capital line of credit ten to eleven months from
the date of the Note.
(23) Such other terms and conditions which Lender may set forth and
which are not prohibited nor inconsistent with provisions of this
Authorization.
(24) Notwithstanding any other provisions of this Authorization, the
Lender may use its own form(s) in lieu of standard SBA forms,
provided Lender has obtained SBA's prior written consent as to
specific content and format of said alternate forms. (This waiver
does not apply to SBA Form 159, Compensation Agreement, SBA Form
147 Note, SBA Form 148 Guaranty and SBA Form 1050 Settlement
Sheet, which are mandatory forms.)
END OF PAGE
8
<PAGE>
5. Parties Affected - This Agreement shall be binding upon Borrower and
----------------
Borrower's successors and assigns. No provision stated herein shall be
waived without the prior written consent of SBA. The Loan shall be
administered as provided in the Guaranty Agreement.
Philip Lader
Administrator
/s/ Kathleen E. K. Lowney January 3, 1997
------------------------------------------------------------------------------
By Kathleen E. K. Lowney, Date
Chief, Finance Division
Borrower hereby agrees to the conditions imposed herein and further agrees that
the terms and conditions herein are for the benefit of, and may be enforced by,
Lender and SBA. This Authorization and Loan Agreement and amendments constitute
the Loan Agreement between Lender and Borrower. Borrower further acknowledges
that this Authorization and Loan Agreement does not create a commitment by
Lender to disburse any funds pursuant hereto and ORAL AGREEMENTS ON ORAL
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM REPAYMENT ENFORCING
OF A DEBT ARE NOT ENFORCEABLE.
WEB PRESS CORPORATION Web Leader International, Inc.
By: /s/ Gary B. Palmer By: /s/ Gary B. Palmer
------------------------------------ -----------------------------------
Gary B. Palmer, General Manager Gary B. Palmer, Chairman
2/20/97 2/20/97
--------------------------------- --------------------------------
Date Date
________________________________________________________________________________
NOTE: Corporate applicants must execute Authorization, in corporate name, by
- ----
duly authorized officer, and seal must be affixed and duly attested; partnership
applicants must execute in firm name, together with signature of a general
partner.
END OF DOCUMENT
9
<PAGE>
AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$100,000.00 02-20-1997 02-20-1998 8015483006 0017 801548
- ------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
22203-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
====================================================================================================================================
</TABLE>
INSURANCE REQUIREMENTS. WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
("Grantor") understands that insurance coverage is required in connection with
the extending of a loan or the providing of other financial accommodations to
Grantor by Lender. These requirements are set forth in the security documents.
The following minimum insurance coverages must be provided on the following
described collateral (the "Collateral"):
COLLATERAL: ALL INVENTORY, EQUIPMENT AND FIXTURES, INCLUDING WHEREVER LOCATED.
TYPE. All risks, including fire, theft and liability.
AMOUNT. Full insurable value.
BASIS. Replacement value.
ENDORSEMENTS. Lender's loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of
ten (10) days' prior written notice to Lender.
DEDUCTIBLES. $1,000.00.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on or before
closing, evidence of the required insurance as provided above, with an effective
date of February 20, 1997, or earlier. Grantor acknowledges and agrees that if
Grantor fails to provide any required insurance or fails to continue such
insurance in force, Lender may do so at Grantor's expense a provided in the
applicable security document. The cost of any such insurance, at the option of
Lender, shall be payable on demand or shall be added to the indebtedness as
provided in the security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO
PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION
AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN;
HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE
INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 20, 1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
BY: /s/ Gary B. Palmer
------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
BY: /s/ Gary B. Palmer
------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
=============================================================================
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE:________________ PHONE:_________________
AGENT'S NAME:___________________________________
INSURANCE COMPANY:_______________________________________________________
POLICY NUMBER:___________________________________________________________
EFFECTIVE DATES:_________________________________________________________
COMMENTS:________________________________________________________________
=============================================================================
================================================================================
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,000,000.00 02-20-1997 02-20-1998 8015483006 0017 801548
- --------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only do not limit the applicability of this document
to any particular loan or item.
- --------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
22023-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
==============================================================================================================
</TABLE>
LOAN TYPE. This is a Variable Rate (1.500% over WASHINGTON FIRST INTERNATIONAL
BANK PRIME RATE, making an initial rate of 9.750%), Revolving Line of Credit
SBA Loan to a Corporation for $1,000,000.00 due on February 20, 1998.
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: Working Capital
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 $1,000,000.00 as follows:
<TABLE>
<S> <C>
AMOUNT PAID TO OTHERS ON BORROWER'S BEHALF: $1,000,000.00
$1,000,000.00 CREDIT LIMIT
-------------
NOTE PRINCIPAL: $1,000,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
PREPAID FINANCE CHARGES PAID IN CASH: $ 5,875.00
$4,000.00 Loan Fee Due Lender
$1,875.00 Loan Fee Due SBA
------------
TOTAL CHARGES PAID IN CASH: $ 5,875.00
</TABLE>
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 IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED FEBRUARY 20, 1997.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, GENERAL MANAGER: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, CHAIRMAN: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
OMB NO. 3245-0076
EXP. DATE: 9/30/94
NOTICE TO NEW SBA BORROWERS
This notice informs recipients of SBA financing of the minimum actions
required to show evidence that they are complying with the requirements of Parts
112, 113, and 117 of SBA Rules and Regulations. Actual compliance with
nondiscriminatory regulations can be determined only after a review and
examination of all facts, practices and records relating to the operation of the
business. During the life of the loan, especially, if a complaint of
discrimination is lodged against the business, a compliance review may be
conducted. The records described below will be reviewed during such compliance
review.
Generally, subsections 112.9, 113.5, and 117.9 of SBA's nondiscrimination
regulations require all SBA recipients of financial assistance to keep records
which would enable SBA to ascertain whether the recipient has complied or is
complying with SBA's regulations for the length of the loan. SPECIFICALLY,
RECIPIENTS ARE REQUIRED TO RETAIN FOR TWO YEARS ALL APPLICATIONS AND EMPLOYMENT
RECORDS, WITH THE RACE AND SEX OF THE APPLICANT NOTED THEREON, CURRENT PAYROLL
RECORDS, AND OTHER RECORDS USUALLY KEPT FOR THE PRUDENT CONDUCT OF BUSINESS.
OTHER RECORDS CONTAINING RACIAL AND ETHNIC DATA BY SEX (E.G., ADMISSION FORMS,
ETC.), WHICH SHOW THE EXTENT TO WHICH MEMBERS OF MINORITY GROUPS ARE
BENEFICIARIES OF THE RECIPIENTS' SERVICES, WHERE APPLICABLE, SHOULD ALSO BE
AVAILABLE FOR EXAMINATION DURING THE COMPLIANCE REVIEW.
At the time of the initial compliance inquiry, SBA will require that
minimum implementation of the employer equal opportunity program specifically
include the following actions.
NOTE: Where appropriate models of the required actions are provided, they
may be used as written, or they may be amended to the needs of the
particular borrowers, provided the essential aim of the model is not
lost.
1. Preparation and dissemination to all employees and applicants for
employment, of a written statement outlining the employer's policy of
extending equal opportunity to all persons without regard to race, color,
religion, sex, marital status, age, handicap, or national origin in such
matters as customer service, recruitment, promotions and advancements,
training programs, wages and salaries, work schedules, transfers, layoff,
demotion, seniority rights, fringe benefits, utilization of restrooms,
lunch rooms, drinking fountains, recreation and parking areas. (See pages 3
and 40).
<PAGE>
2. Specific designation of responsible officials to coordinate and implement
the equal employment opportunity program.
3. Development of procedures for the dissemination and feedback of equal
opportunity information to supervisory personnel and their subordinates,
i.e.
a. Forward to all supervisory personnel (initialed signature) written
notice that employee meetings will be held during which management's
equal opportunity policy and program will be discussed.
b. Request that each supervisor advise management of the date such
meetings were held and how the equal opportunity subject matter was
interpreted to all employees in attendance at such meetings.
4. Where applicable, notifications to unions in writing of your equal
opportunity policy; seek incorporation of such policies in union
agreements. (See page 5) Request written acknowledgment of receipt of your
notice to the unions.
5. Posting of SBA posters in conspicuous places, visible to the public,
employees and applicants for employment, indicating that your company is an
equal opportunity firm.
6. Utilize "An Equal Opportunity Employer" in all help-wanted advertisements
and job orders.
In addition to the minimum actions, SBA policy requires that all borrowers
and subrecipients of SBA financing take necessary steps to assure the public,
and employees or applicants for employment, an equal opportunity. With due
regard for the size of your business, select the appropriate items from the
enclosed checklist (page 7 and 8) which provides the varied components of a
necessary action. The larger your business, particularly in terms of number of
employees, the greater the opportunity to employ a wider range of checklist
items. Continue to keep these measures alive by setting up appropriate follow-up
procedures. Your program should be planned to achieve continual minority group,
female, and qualified handicapped improvement and inclusion in apprentice and
training programs, entry-level, white collar and supervisory occupations.
Should you have any further questions, desire additional information or
assistance in connection with the development and implementation of your equal
opportunity policies as required by our regulations, please contact the Area
Civil Rights Director responsible for your geographic area through the office
by which your loan was approved.
SBA FORM 793(11/91) 2
<PAGE>
MODEL POLICY STATEMENT
TO: Department Managers
Supervisory Personnel
Employees
Applicants for Employment
SUBJECT: Equal Employment Opportunity
OBJECTIVE: To obtain qualified employees consistent with
position requirements; to seek, employ, promote,
and treat all employees and applicants for
employment without discrimination as to race,
color, religion, sex, age, marital status,
handicap, or national origin.
It is the policy of the WEB PRESS CORPORATION AND ITS SUBSIDIARIES WEB
----------------------------------------------
LEADER INTERNATIONAL, INC. to give equal opportunity to all qualified persons
- -------------------------
without regard to race, color, religion, sex, marital status, age, handicap, or
national origin.
All employment practices are to provide that all individuals be recruited,
hired, assigned, advanced, compensated and retained on the basis of their
qualifications, and treated equally in these and all other respects without
regard to race, color, religion, age, sex, marital status, handicap, or
national origin.
It shall be considered the responsibility of every supervisory employee to
further the implementation of this policy and ensure conformance by their
subordinates.
Supervisory personnel as well as those responsible for hiring new employees
must take all necessary action in the elimination of possible discrimination
towards employees and applicants for employment with WED PRESS CORPORATION AND
-------------------------
ITS SUBSIDIARY WEB LEADER INTERNATIONAL, INC. in all categories and levels of
- ---------------------------------------------
employment and employee relations.
Responsibility for seeing that this policy is continuously followed has
been assigned to Gary B. Palmer, General Manager of WEB PRESS CORPORATION, and
-------------------------------------------------------------
Chairman of its subsidiary, WEB LEADER INTERNATIONAL, INC. . The designated
- ----------------------------------------------------------
officials shall work with each department manager and plant supervisor in
furthering its implementation and monitoring the progress being made.
Signature /s/ Gary B. Palmer
------------------------------------
Gary B. Palmer
General Manager, Web Press Corp.
Signature /s/ Gary B. Palmer
------------------------------------
Gary B. Palmer
Chairman, Web Leader Int'l, Inc.
3
<PAGE>
MODEL POLICY STATEMENT
(For Schools, Nursing Homes, and other
similar service-oriented businesses)
TO: Department Managers
Supervisory Personnel
Employees, Applicants for Employment
Recipient of Services
SUBJECT: Equal Opportunity
OBJECTIVE: To obtain qualified employees consistent with
position requirements, and to ensure that all
employees, applicants and clients be treated
without discrimination as to race, color,
religion, sex, marital status, handicap, age,
or national origin.
It is the policy of WEB PRESS CORPORATION AND ITS SUBSIDIARY WEB LEADER
---------------------------------------------------
INTERNATIONAL, INC. to give equal employment opportunity to all qualified
- -------------------
persons, and to provide that all individuals be recruited, hired, assigned,
advanced, compensated and retained on the basis of their qualifications, and
treated equally in these and all other respects without regard to race, color,
religion, sex, marital status, age, handicap, or national origin.
All selection procedures, admissions, assignments, or any other facility
shall be available to all qualified persons who seek such services without
respect to race, color, religion, sex, marital status, handicap, age or national
origin.
Supervisory personnel and other personnel responsible for hiring and
carrying out other selection policies must take all necessary action in the
elimination of possible discrimination towards employees, applicants for
employment, and clients of
WEB PRESS CORPORATION AND ITS SUBSIDIARY WEB LEADER INTERNATIONAL, INC.
-----------------------------------------------------------------------
Responsibility for seeing that this policy is continuously followed has
been assigned to Gary B. Palmer, General Manager of WEB PRESS CORPORATION, and
-------------------------------------------------------------
Chairman of its subsidiary, WEB LEADER INTERNATIONAL, INC.. The designated
- -------------------------------------------------------
officials shall work with each department manager and other selecting official
in furthering its implementation and monitoring the progress being made.
Signature /s/ Gary B. Palmer
-------------------------
Gary B. Palmer
General Manager, Web Press Corp.
Signature /s/ Gary B. Palmer
-------------------------
Gary B. Palmer
Chairman, Web Leader Int'l, Inc.
4
<PAGE>
MODEL REAFFIRMATION OF POLICY STATEMENT
TO: WEB PRESS CORPORATION AND ITS SUBSIDIARY WEB
--------------------------------------------------
LEADER INTERNATIONAL, INC. Company/ Corporation
--------------------------
Employees
SUBJECT: Equal Employment Opportunity
Periodically it becomes desirable and necessary to restate the
Company's/Corporation's policy on matters of significance to employees. One
policy which it is timely to reemphasize is that of equal opportunity.
It is the policy of WEB PRESS CORPORATION AND ITS SUBSIDIARY WEB LEADER
---------------------------------------------------
INTERNATIONAL, INC. to provide equality of opportunity for any employee or
- ------------------
applicant for employment, irrespective of race, color, religion, sex, age,
marital status or national origin. Equality of opportunity in employment shall
also be extended to those qualified individuals with handicaps who apply for or
are employed by this company. I am sure that you are all aware of this policy
which has been given added emphasis by legislation enacted by the Federal
Government to insure compliance with this principle throughout the country.
The (Company/Corporate) policy, which management is pledged to support,
thus implements the enacted legislation to assure all employees of equal
treatment. Through a positive expression of adherence to the principle of equal
opportunity, we can ourselves achieve success for both the Company and its
employees.
Responsibility for the implementation of this policy has been assigned to
Gary B. Palmer, General Manager of WEB PRESS CORPORATION, and Chairman of its
- -----------------------------------------------------------------------------
subsidiary, WEB LEADER INTERNATIONAL, INC.
- -----------------------------------------
Signature /s/ Gary B. Palmer
------------------------------------
Gary B. Palmer
General Manager, Web Press Corp.
Signature /s/ Gary B. Palmer
------------------------------------
Gary B. Palmer
Chairman, Web Leader Int'l, Inc.
5
<PAGE>
MODEL LABOR ORGANIZATION CONTRACT CLAUSE
During the performance of this contract, both parties agree that they will
not discriminate against any qualified applicant for employment, apprentice
trainee, or employee because of race, color, religion, sex, marital status, age,
handicap, or national origin. Both parties to this agreement will take all
necessary action to insure that qualified applicants, apprentice trainees, and
employees are employed and that they are treated during employment without
regard to their race, color, religion, sex, age, marital status, handicap, or
national origin. Such action shall include, but not be limited to the following:
Employment, upgrading, demotion or training; recruitment or recruitment
advertisement; and selection for training including apprenticeship. The employer
agrees to post in conspicuous places, available to employees and applicants for
employment, including applicants for apprentice training, notices setting forth
the provisions of this nondiscrimination clause.*
Both parties to this agreement will select apprentices from among qualified
applicants on the basis of qualifications alone and without regard to race,
color, religion, age, sex, marital status, handicap, or national origin, or
occupationally irrelevant physical requirements in accordance with objective
standards which permit review, after full and fair opportunity for application;
and this program shall be operated on a completely nondiscriminatory basis.
In order to insure full and continuous employment for all employees, and to
establish equal opportunity in all phases of the work situation, both parties to
this agreement will abide by the requirements of the equal employment
opportunity affirmative action regulations of the city, state or Federal
government agency which the employer is subject to with a city, a state, or a
Federal government agency, and under which he/she had promised performance.
* THIS CONDITION MAY BE MET BY POSTING SBA FORM 722, "EQUAL OPPORTUNITY POSTER."
SBA FORM 793 (11/91)
PREVIOUS EDITIONS OBSOLETE 6
<PAGE>
EQUAL OPPORTUNITY PROGRAM
CHECKLIST
---------
1. Although work areas, cafeterias, washrooms and locker areas are not
segregated is there segregation which exists by tradition and practice? If
so, what action is in order?
2. Do "black islands," "brown areas," female-only or individuals with
handicap(s) only department/sections exist that is minority, individuals
with handicap(s), or female groups to one side of or grouped within the
majority group of employees?
3. Do you maintain regular contacts with local groups concerned with racial
problems?
4. Are you a member or do you have a personal representative on local
community biracial or women's committees?
5. When you advertise job openings, do you utilize minority group newspapers?
6. Are you utilizing the following suggested organizations as recruitment
sources for obtaining qualified minority, female, and individuals with
handicap(s) applicants: e.g.,
a. Urban League
b. NAACP
c. LULAC
d. IMAGE
e. Operation SER
f. NOW
q. Local minority group clergyman
h. United States or State Employment Service
i. State and local racially oriented service organizations
j. Organizations concerned with the employment of
individuals with handicap(s).
7. Are you recruiting applicants at high schools with predominantly minority
group enrollments?
8. Are you scrutinizing he qualifications of minority, female, and qualified
individuals with handicap(s) to insure that their talent is being utilized
effectively?
9. Do you regularly remind your supervisors of their individual
responsibilities in implementing the company's equal opportunity program?
10. Have you critically examined local employment procedures to insure unbiased
consideration of majority, minority, female and qualified, individuals with
handicaps.
11. Are your facilities assessable to and usable by individuals with handicaps?
12. Have you considered job tailoring in order to afford an otherwise qualified
individual with a handicap an opportunity to work for your organization?
7
<PAGE>
CHECKLIST (continued)
13. Are selection procedures for promotion devised to assure consideration of
majority, minority, and female employees, and qualified individuals with
handicap(s)?
14. Do on-the-job training programs include majority, minority and female
employees, and qualified individuals with handicap(s)?
15. Does your facility cooperate with the support community vocational training
programs?
16. Do you have a training program on the premises to improve the skills of
majority, minority, and female employees, and qualified individuals with
handicap(s).
17. Does your survey of employees with high potential include qualified
individual(s) with handicaps, minority and female employees?
18. Do you have written evidence of your request for applicants from minority,
and female organizations, and organizations designated for individuals with
handicap(s)?
19. Do you maintain a record of your contacts with minority, and women's
organizations and organizations catering to the concerns of individuals
with handicap(s)?
20. Does your "house organ" publicity covering business and social events of
general interest, regularly include participants who are minority, female
and individuals with handicap(s)?
21. Do you post announcements of new job openings, indicating the fact that
such positions are available to all qualified personnel?
22. Do you have written job descriptions for different job classifications?
23. Does your pay scale apply equally to all new hires having like
qualifications, regardless of race, color, religion, sex, martial status,
age, handicap, or national origin?
24. Have all contractors and subcontractors been advised in writing of the
company's equal opportunity policy?
25. Have all employees during with the public been advised of your policy to
provide service without regard to race, color, religion, sex, marital
status, handicap, age, or national origin.
8
<PAGE>
________________________________________________________________________________
CERTIFICATION REGARDING
DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY EXCLUSION
LOWER TIER COVERED TRANSACTION
________________________________________________________________________________
This certification is required by the regulations implementing Executive
Order 12549, Debarment and Suspension, 13 CFR Part 145. The regulations were
published as Part VII of the May 26, 1988 Federal Register (pages 19160-19211).
Copies of the regulations may be obtained by contacting the person to which this
proposal is submitted.
[BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE]
(1) The prospective lower tier participant certifies, by submission of this
proposal, that neither it nor its principals are presently debarred,
suspended, proposed for debarment, declared ineligible, or voluntarily
excluded from participation in this transaction by any Federal department
or agency.
(2) Where the prospective lower tier participant is unable to certify to any of
the statements in this certification, such prospective participant shall
attach an explanation to this proposal.
Business Name: Web Press Corporation and Web Leader International, Inc.
------------------------------------------------------------------
Date: February 20, 1997 By: /s/ Gary B. Palmer
----------------- -----------------------------------------------
Gary B. Palmer, General Manager Web Press Corp.
(Applicant)
By: /s/ Gary B. Palmer
------------------------------------------------
Gary B. Palmer, Chairman Web Leader Int'l Inc.
(Applicant)
SBA TEMPORARY FORM 1624 (10-88)
<PAGE>
-2-
INSTRUCTIONS FOR CERTIFICATION
1. By signing and submitting this proposal, the prospective lower tier
participant is providing the certification set out below.
2. The certification in this clause is a material representation of fact
upon which reliance was placed when this transaction was entered into. If it is
later determined that the prospective lower tier participant knowingly rendered
an erroneous certification, in addition to other remedies available to the
Federal Government, the department or agency with which this transaction
originated may pursue available remedies, including suspension and/or debarment.
3. The prospective lower tier participant shall provide immediate written
notice to the person to which this proposal is submitted if at any time the
prospective lower tier participant learns that its certification was erroneous
when submitted or has become erroneous by reason of changed circumstances.
4. The terms "covered transaction," "debarred," "suspended," "ineligible,"
"lower tier covered transaction," "participant," "person," "primary covered
transaction," "principal," "proposal," and "voluntarily excluded," as used in
this clause, have the meanings set out in the Definitions and Coverage sections
of the rules implementing Executive Order 12549. You may contact the person to
which this proposal is submitted for assistance in obtaining a copy of those
regulations (13 CFR Part 145).
5. The prospective lower tier participant agrees by submitting this
proposal that, should the proposed covered transaction be entered into, it shall
not knowingly enter into any lower tier covered transaction with a person who is
debarred, suspended, declared ineligible, or voluntarily excluded from
participation in this covered transaction, unless authorized by the department
or agency with which this transaction originated.
6. The prospective lower tier participant further agrees by submitting
this proposal that it will include the clause titled "Certification Regarding
Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier Covered
Transactions," without modification, in all lower tier covered transactions and
in all solicitations for lower tier covered transactions.
7. A participant in a covered transaction may rely upon a certification of
a prospective participant in a lower tier covered transaction that it is not
debarred, suspended, ineligible, or voluntarily excluded from the covered
transaction, unless it knows that the certification is erroneous. A participant
may decide the method and frequency by which it determines the eligibility of
its principals. Each participant may, but is not required to, check the
Nonprocurement List.
8. Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith the
certification required by this clause. The knowledge and information of a
participant is not required to exceed that which is normally possessed by a
prudent person in the ordinary course of business dealings.
9. Except for transactions authorized under paragraph 5 of these
instructions, if a participant in a covered transaction knowingly enters into a
lower tier covered transaction with a person who is suspended, debarred,
ineligible, or voluntarily excluded from participation in this transaction, in
addition to other remedies available to the Federal Government, the department
or agency with which this transaction originated may pursue available remedies,
including suspension and/or debarment.
<PAGE>
OMB APPROVAL N0. 3245-0201
-------------------------
SBA LOAN NUMBER
-------------------------
EWCP-987816 30-00 SEA
-------------------------
COMPENSATION AGREEMENT FOR SERVICES IN CONNECTION WITH APPLICATION AND LOAN
FROM (OR IN PARTICIPATION WITH) SMALL BUSINESS ADMINISTRATION
The undersigned representative (attorney, accountant, engineer, appraiser,
etc.) hereby agrees that the undersigned has not and will not, directly or
indirectly, charge or receive any payment in connection with the application for
or the making of the loan except for services actually performed on behalf of
the Applicant. The undersigned further agrees that the amount of payment for
such services shall not exceed an amount deemed reasonable by SBA (and, if it is
a participation loan, by the participating lending institution), and to refund
any amount in excess of that deemed reasonable by SBA (and the participating
institution). This agreement shall supersede any other agreement covering
payment for such services.
A general description of the services performed, or to be performed, by the
undersigned and the compensation paid or to be paid are set forth below. If the
------
total compensation in any case exceeds $1,000 (or $300 for: (1) regular business
- --------------------------------------------------------------------------------
loans of $15,000 or less; or (2) all disaster home loans) or if SBA should
- ---------------------------------------------------------------------------
otherwise require, the services must be itemized on a schedule attached showing
- -------------------------------------------------------------------------------
each date services were performed, time spent each day, and description of
- --------------------------------------------------------------------------
service rendered on each day listed.
- ------------------------------------
The undersigned Applicant and representative hereby certify that no other fees
have been charged or will be charged by the representative in connection with
this loan, unless provided for in the loan authorization specifically approved
by SBA.
GENERAL DESCRIPTION OF SERVICES Paid Previously $__________
Additional Amount to be Paid $__________
NONE Total Compensation $__________
(Section 13 of the Small Business Act (15 USC 642) requires disclosures
concerning fees. Parts 103, 108 and 120 Of Title 13 of the Code of Federal
Regulations contain provisions covering appearances and compensation of persons
representing SBA applicants. Section 103.13-5 authorizes the suspension or
revocation of the privilege of any such person to appear before SBA for charging
a fee deemed unreasonable by SBA for services actually performed, charging of
unreasonable expenses, or violation of this agreement. Whoever commits any
fraud, by false or misleading statement or representation, or by conspiracy,
shall be subject to the penalty of any applicable Federal or State statute.)
Dated:_________________________ _________________________________
(Representative)
By _________________________________
The Applicant hereby certifies to SBA that the above representations,
description of services and amounts are correct and satisfactory to Applicant.
Web Press Corporation and Web Leader Int'l, Inc.
Dated: February 20, 1997 /s/ Gary B. Palmer
------------------ --------------------------------------------
Gary B. Palmer, General Manager Web Press Corp.
/s/ Gary B. Palmer
--------------------------------------------
Gary B. Palmer, Chairman Web Leader Int'l, Inc.
The participating lending institution hereby certifies that the above
representations of service rendered and amounts charged are reasonable and
satisfactory to it.
Dated: February 20, 1997 Washington First International Bank
- ------------------------ --------------------------------------------
(Lender)
By /s/ Michael Lum
--------------------------------------------
Michael Lum, Vice-President
NOTE: Foregoing certification must be executed, if by a corporation, in
corporate name by duly authorized officer and duly attested; by a partnership,
in the firm name, together with signature of a general partner.
PLEASE NOTE: THE ESTIMATED BURDEN HOURS FOR THE COMPLETION OF SBA FORM, 147,
148, 159, 160, 160A, 529B, 928 AND 1059 IS 6HRS. PER RESPONSE. IF YOU HAVE ANY
QUESTIONS OR COMMENTS CONCERNING THIS ESTIMATE OR ANY OTHER ASPECT OF THIS
INFORMATION COLLECTION PLEASE CONTACT, WILLIAM CLINE, CHIEF ADMINISTRATIVE
INFORMATION BRANCH, U.S. SMALL BUSINESS ADMINISTRATION, 409 3RD ST. S.W.
WASHINGTON D.C. 20416 AND GARY WAXMAN, CLEARANCE OFFICER, PAPERWORK REDUCTION
PROJECT {3245-0201}, OFFICE OF MANAGEMENT AND BUDGET, WASHINGTON, D.C. 20503.
SBA FORM 159 (1-91) REF SOP 70 50 USE 7-89 EDITION UNTIL EXHAUSTED
<PAGE>
SMALL BUSINESS ADMINISTRATION
POLICY AND REGULATIONS CONCERNING REPRESENTATIVES AND THEIR FEES
An applicant for a loan from SBA may obtain the assistance of any attorney,
accountant, engineer, appraiser or other representative to aid him in the
preparation and presentation of his application to SBA; however, such
presentation is not mandatory. In the event a loan is approved, the services
of an attorney may be necessary to assist in the preparation of closing
documents, title abstracts, etc. SBA will allow the payment of reasonable fees
or other compensation for services performed by such representatives on behalf
of the applicant.
There are no "authorized representatives" of SBA, other than our regular
salaried employees. Payment of any fee or gratuity to SBA employees is illegal
and will subject the parties to such a transaction to prosecution.
SBA Regulations (Part 103, Sec. 103.13-5(c)) prohibit representatives from
charging or proposing to charge any contingent fee for any services performed in
connection with an SBA loan unless the amount of such fee bears a necessary and
reasonable relationship to the services actually performed; or to charge for any
expenses which are not deemed by SBA to have been necessary in connection with
the application. The Regulations (Part 120, Sec. 120. 104-2) also prohibit the
payment of any bonus, brokerage fee or commission in connection with SBA loans.
In line with these Regulations SBA will not approve placement or finder's
fees for the use or attempted use of influence in obtaining or trying to obtain
an SBA loan, or fees based solely upon a percentage of the approved loan or any
part thereof.
Fees which will be approved will be limited to reasonable sums of services
actually rendered in connection with the application or the closing, based upon
the time and effort required, the qualifications of the representative and the
nature and extent of the services rendered by such representatives.
Representatives of loan applicants will be required to execute an agreement as
to their compensation for services rendered in connection with said loan.
It is the responsibility of the applicant to set forth in the appropriate
section of the application the names of all persons or firms engaged by or on
behalf of the applicant. Applicants are required to advise the Regional Office
in writing the names and fees of any representatives engaged by the applicant
subsequent to the filing of the application. This reporting requirement is
approved under OMB Approval Number 2345-0016.
Any loan applicant having any question concerning the payments of fees, or
the reasonableness of fees, should communicate with the Field Office where the
application is filed.
<PAGE>
OMB Approval No. 3245-0201
Expiration Date: 11-30-90
U.S. SMALL BUSINESS ADMINISTRATION
======================
SBA LOAN NUMBER
----------------------
EWCP 987816-30-00 SEA
======================
NOTE
SEATTLE, WA
---------------------------
(CITY AND STATE)
(DATE): FEBRUARY 20, 1997
$ 1,000,000.00
For value received, the undersigned promises to pay to the order of Washington
First International Bank at its office in the city of SEATTLE, state of
Washington, or at holder's option, at such other place as may be designated from
time to time by the holder One Million & 00/100 Dollars, with interest on unpaid
principal computed from the date of each advance to the undersigned at the rate
of 9.750 per cent per annum, payment to be made in installments as follows:
Borrower shall pay (from proceeds of financed transactions) ON DEMAND, or if no
demand, then on or before twelve (12) months from the date of this Note the
total principal amounts advanced by Lender from time to time, plus interest as
herein provided. No advance shall be made under this Note if, as a result of
such advance, the total principal amount outstanding hereunder would exceed the
sum of $1,000,000.00. Each advance shall bear interest from the date made, at
this Note rate specified below, payable monthly, beginning one month from the
date of Note, and on the same day of each calendar month thereafter.
THIS IS A VARIABLE INTEREST RATE NOTE. Interest on each principal advance shall
accrue at one and one-half (1.50%) per annum above the Lender's publicity
announced prime rate of interest ("Prime Rate"). The initial rate is nine and
three-quarter percent (9.75%) per annum, payable monthly beginning one month
from the date of Note. Each change in interest rate shall be effective on date
of each announced change in the Lender's Prime Rate.
LINE OF CREDIT: This loan is a revolving line of credit based on a series of
transactions with related letter of credit orders acceptable to Lender. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower 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) Borrower or
any guarantor seeks, claims, or otherwise attempts to limit, modify or revoke
such Borrower's or guarantor's liability under the Note or guaranty with respect
to this or any other loan with Lender; or (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender. Any amounts due under this Note may be paid prior to maturity without
penalty or notice.
LATE CHARGE. If a payment is more than 10 days late, Borrower will be charged
5.0% of the unpaid portion of the regularly scheduled payment.
If this Note contains a fluctuating interest rate, the notice provision is not a
precondition for fluctuation (which shall take place regardless of notice).
Payment of any installment of principal or interest owing on this Note may be
made prior to the maturity date thereof without penalty.
Borrower shall provide lender with written notice of intent to prepay part or
all of this loan at least three (3) weeks prior to the anticipated prepayment
date. A prepayment is any payment made ahead of schedule that exceeds twenty
(20) percent of the then outstanding principal balance. If borrower makes a
prepayment and fails to give at least three weeks advance notice of intent to
prepay, then, notwithstanding any other provision to the contrary in this Note
or any other document, borrower shall be required to pay lender three weeks
interest on the unpaid principal as of the date preceding such prepayment.
The term "Indebtedness" as used herein shall mean the Indebtedness evidenced by
this Note, including principal, interest, and expenses, whether contingent, now
due, or hereafter to become due, and whether heretofore or contemporaneously
herewith or hereafter contracted. The term "Collateral" as used in this Note
shall mean any funds, guaranties, or other property or rights therein of any
nature whatsoever or the proceeds thereof which may have been, are, or hereafter
may be, hypothecated, directly or indirectly by the undersigned or others, in
connection with, or as security for, the Indebtedness or any part thereof. The
Collateral, and each part thereof, shall secure the Indebtedness and each part
thereof. The covenants and conditions set forth or referred to in any and all
instruments of hypothecation constituting the Collateral are hereby incorporated
in this Note as covenants and conditions of the undersigned with the same force
and effect as though such covenants and conditions were fully set forth herein.
The indebtedness shall immediately become due and payable, without notice or
demand, upon the appointment of a receiver or liquidator, whether voluntary or
involuntary, for the undersigned or for any of its property, or upon the filing
of a petition by or against the undersigned under the provisions of any state
insolvency law or under the provisions of the Bankruptcy Reform Act of 1978, as
amended, or upon the making by the undersigned of an assignment for the benefit
of its creditors. Holder is authorized to declare all or any part of the
Indebtedness immediately due and payable upon the happening of any of the
following events: (1) Failure to pay any part of the Indebtedness
<PAGE>
02-20-1997 PROMISSORY NOTE PAGE 2
(Continued)
================================================================================
when due; (2) nonperformance by the undersigned of any agreement with, or any
condition imposed by, Holder or Small Business Administration (hereinafter
called "SBA"), with respect to the indebtedness; (3) Holder's discovery of the
undersigned's failure in any application of the undersigned to Holder or SBA to
disclose any fact deemed by Holder to be material or of the making therein or in
any of the said agreements, or in any affidavit or other documents submitted in
connection with said application or the indebtedness, of any misrepresentation
by, on behalf of, or for the benefit of the undersigned; (4) the reorganization
(other than a reorganization pursuant to any of the provisions of the Bankruptcy
Reform Act of 1978, as amended) or merger or consolidation of the undersigned
(or the making of any agreement therefor) without the prior written consent of
Holder; (5) the undersigned's failure duly to account, to Holder's satisfaction,
at such time or time as Holder may require, for any of the Collateral, or
proceeds thereof, coming into the control of the undersigned; or (6) the
institution of any suit affecting the undersigned deemed by Holder to affect
adversely its interest hereunder in the Collateral or otherwise. Holder's
failure to exercise its rights under this paragraph shall not constitute a
waiver thereof.
Upon the nonpayment of the indebtedness, or any part thereof, when due, whether
by acceleration or otherwise, Holder is empowered to sell, assign, and deliver
the whole or any part of the Collateral at public or private sale, without
demand, advertisement, or notice of the time or place of sale or of any
adjournment thereof, which are hereby expressly waived. After deducting all
expenses incidental to or arising from such sale or sales, Holder may apply the
residue of the proceeds thereof to the payment of the indebtedness, as it shall
deem proper, returning the excess, if any, to the undersigned. The undersigned
hereby waives all right of redemption or appraisement whether before or after
sale.
Holder is further empowered to collect or cause to be collected or otherwise to
be converted into money all or any part of the Collateral, by suit or otherwise,
and to surrender, compromise, release, renew, extend, exchange, or substitute
any item of the Collateral in transactions with the undersigned or any third
party, irrespective of any assignment thereof by the undersigned, and without
prior notice to or consent of the undersigned or any assignee. Whenever any item
of the Collateral shall not be paid when due, or otherwise shall be in default,
whether or not the indebtedness, or any part thereof, has become due, Holder
shall have the same rights and powers with respect to such item of the
Collateral as are granted in this paragraph in case of nonpayment of the
indebtedness, or any part thereof, when due. None of the rights, remedies,
privileges, or powers of Holder expressly provided for herein shall be
exclusive, but each of them shall be cumulative with end in addition to every
other right, remedy, privilege, and power now or hereafter existing in favor of
Holder, whether at law or equity, by statute or otherwise.
The undersigned agrees to take all necessary steps to administer, supervise,
preserve, and protect the Collateral; and regardless of any action taken by
Holder, there shall be no duty upon Holder in this respect. The undersigned
shall pay all expenses of any nature, whether incurred in or out of court, and
whether incurred before or after this Note shall become due at its maturity date
or otherwise, including but not limited to reasonable attorney's fees and cost,
which Holder may deem necessary or proper in connection with the satisfaction of
the indebtedness or the administration, supervision, preservation, protection of
(including, but not limited to, the maintenance of adequate insurance) or the
realization upon the Collateral. Holder is authorized to pay at any time and
from time to time any or all of such expenses, add the amount of such payment to
the amount of the indebtedness, and charge interest thereon at the rate
specified herein with respect to the principal amount of this Note.
The security rights of Holder and its assigns hereunder shall not be impaired by
Holder's sale, hypothecation, or rehypothecation of any note of the undersigned
or any item of the Collateral, or by an indulgence, including but not limited to
(a) any renewal, extension, or modification which Holder may grant with respect
to the indebtedness or any part thereof, or (b) any surrender, compromise,
release, renewal, extension, exchange, or substitution which Holder may grant in
respect of the Collateral, or (c) any indulgence granted in respect of any
endorser, guarantor, or surety. The purchaser, assignee, transferee, or pledges
of this Note, the Collateral, and guaranty, and any other document (or any of
them), sold, assigned, transferred, pledged, or repledged, shall forthwith
become vested with and entitled to exercise all the powers and rights given by
this Note and all applications of the undersigned to Holder or SBA, as if said
purchaser, assignee, transferee, or pledges were originally named as Payee in
this Note and in said application or applications.
This promissory note is given to secure a loan which SBA is making or in which
it is participating and, pursuant to Part 101 of the Rules and Regulations of
SBA (13 C.F.R. 101.1(d)), this instrument is to be construed and (when SBA is
the Holder or a party in interest) enforced in accordance with application
federal law.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, General Manager: WEB PRESS CORPORATION
By: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.
<PAGE>
02-20-1997 PROMISSORY NOTE PAGE 3
(CONTINUED)
================================================================================
NOTE.--Corporate applicants must execute Note, in corporate name, by duly
authorized officer, and said must be affixed and duly attested; partnership
applicants must execute Note in firmname, together with signature of a general
partner.
SBA FORM 147 (5-87) PREVIOUS EDITIONS OBSOLETE
<PAGE>
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$100,000.00 02-20-1997 02-20-1998 8015483005 0017 801548
- ------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
22203-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
====================================================================================================================================
</TABLE>
THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. (REFERRED TO BELOW AS "GRANTOR"); AND
WASHINGTON FIRST INTERNATIONAL BANK (REFERRED TO BELOW AS "LENDER"). FOR
VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER A SECURITY INTEREST IN THE
COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT LENDER SHALL HAVE THE
RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE COLLATERAL, IN ADDITION TO
ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
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 States of
America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described property
of Grantor, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located:
ALL INVENTORY, ACCOUNTS, EQUIPMENT, GENERAL INTANGIBLES AND FIXTURES,
TOGETHER WITH THE FOLLOWING SPECIFICALLY DESCRIBED PROPERTY:
WHEREVER LOCATED
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral
section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
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 WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC., Its successors and assigns.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as
well as all claims by Lender against Grantor, or any one or more of them,
whether existing now or later; whether they are voluntary or involuntary,
due or not due, direct or indirect, absolute or contingent, liquidated or
unliquidated; whether Grantor may be liable individually or jointly with
others; whether Grantor may be obligated as guarantor, surety,
accommodation party 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 Washington First International Bank, its
successors and assigns.
NOTE. The word "Note" means the note or credit agreement dated February
20, 1997, in the principal amount of $100,000.00 from WEB PRESS
CORPORATION AND WEB LEADER INTERNATIONAL, INC. to Lender, together with all
renewals of, extensions of, modifications of, refinancings or,
consolidations of and substitutions for the note or credit agreement.
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.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor 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. Grantor authorizes
Lender, to the extend permitted by applicable law, to change or setoff all
Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to lender as follows:
ORGANIZATION. Grantor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Washington.
Grantor has its chief executive office at 22203 - 68TH AVENUE SOUTH, KENT,
WA 98032. Grantor will notify Lender of any change in the location of
Grantor's chief executive office.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
by Grantor have been duly authorized by all necessary action by Grantor 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 Grantor or (b)
any law, governmental regulation, court decree, or
<PAGE>
02-20-1997 COMMERCIAL SECURITY AGREEMENT PAGE 2
(CONTINUED)
================================================================================
order applicable to Grantor.
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon; photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of
Grantor. THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN
EFFECT EVEN THOUGH ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND
EVEN THOUGH FOR A PERIOD OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparations and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral. At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bona fide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract of sale, or for
services theretofore performed by Grantor with or for the account debtor;
there shall be no setoffs or counterclaims against any such account; and no
agreement under which any deductions or discounts may be claimed shall have
been made with the account debtor except those disclosed to Lender in
writing.
LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver
to Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor; and (d)
all other properties where Collateral is or may be located. Except in the
ordinary course of its business, Grantor shall not remove the Collateral
from its existing locations without the prior written consent of Lender.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the
records concerning the Collateral) at Grantor's address shown above, or at
such other locations as are acceptable to Lender. Except in the ordinary
course of its business, including the sales of inventory, Grantor shall not
remove the Collateral from its existing locations without the prior written
consent of Lender. To the extent that the Collateral consists of vehicles,
or other titled property, Grantor shall not take or permit any action which
would require application for certificates of title for the vehicles
outside the State of Washington, without the prior written consent of
Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A sale in
the ordinary course of Grantor's business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Grantor shall not
pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right
to the security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles,
Grantor shall deliver to Lender schedules of such Collateral, including
such information as Lender may require, including without limitation names
and addresses of account debtors and agings of accounts and general
intangibles. Insofar as the Collateral consists of inventory and equipment,
Grantor shall deliver to Lender, as often as Lender shall require, such
lists, descriptions, and designations of such Collateral as Lender may
require to identify the nature, extent, and location of such Collateral.
Such information shall be submitted for Grantor and each of its
subsidiaries or related companies.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit
or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have
the right at all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of all
cases involving the return, rejection, repossession, loss or damage of or
to any Collateral; of any request for credit or adjustment or of any other
dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount
of the Collateral.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to
Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys' fees or other charges that could accrue as
a result of foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the Collateral. Granter shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability
<PAGE>
02-20-1997 COMMERCIAL SECURITY AGREEMENT PAGE 3
(Continued)
================================================================================
Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.
The representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the indebtedness and
the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days' prior written
notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including if it so
chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof expenditure, pay or reimburse Grantor
from the proceeds for the reasonable cost of repair or restoration. If
Lender does not consent to repair or replacement of the Collateral, Lender
shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not have been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (a)
the name of the insurer; (b) the risks insured; (c) the amount of the
policy; (d) the property insured; (e) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value: and (f) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral documents to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral
<PAGE>
02-20-1997 COMMERCIAL SECURITY AGREEMENT PAGE 4
(CONTINUED)
================================================================================
securing the Indebtedness. This includes a garnishment of any of Grantor's
deposit accounts with Lender. However, this Event of Default shall not
apply if there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor of forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or
becomes incompetent. Lender, at its option, may, but shall not be required
to, permit the Guarantor's estate to assume unconditionalty the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure the Event of Default.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within fifteen (15) days; or
(b), if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Washington Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
or otherwise deal with the Collateral or proceeds thereof in its own name
or that of Grantor. Lender may sell the Collateral at public auction or
private sale. Unless the Collateral threatens to decline speedily in value
or is a type customarily sold on a recognized market, Lender will give
Grantor reasonable notice of the time after which any private sale or any
other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the Collateral, shall become a part of the Indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note
rate from the date of expenditure until repaid.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
COLLECT REVENUE, APPLY ACCOUNTS Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the indebtedness or apply it to payments of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, sue for,
foreclose, or realize on the Collateral as Lender may determine, whether or
not Indebtedness or Collateral is then due. For these purposes, Lender may,
on behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts for chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of
a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it may have available at law,
in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, shall
be cumulative and may be exercised singularly or concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to
exercise its 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
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be changed or bound by the alteration or
amendment.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of Washington. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of the
State of Washington. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, any and anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
<PAGE>
02-20-1997 COMMERCIAL SECURITY AGREEMENT PAGE 5
(CONTINUED)
================================================================================
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.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
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 parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to all Grantors. For
notice purposes, Grantor will keep Lender informed at all times of
Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, Irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the claim; and (d) to
file any claim or claims or to take any action or institute or take part in
any proceedings, either in its own name or in the name of the Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the Indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
preference claim in Borrower's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Borrower as
provided above in the "EXPENDITURES BY LENDER" paragraph.
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 finding 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, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTEREST. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
Indebtedness, Borrower irrevocable waives, disclaims and relinquishs all
claims against such other person which Borrower has or would otherwise have
by virtue of payment of the Indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contributions or
exoneration.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 20,
1997.
GRANTOR:
WEB PRESS CORPORATED AND WEB LEADER INTERNATIONAL, INC.
BY: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, GENERAL MANAGER: WEB PRESS CORPORATION
BY: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, CHAIRMAN: WEB LEADER INTERNATIONAL, INC
===============================================================================
<PAGE>
COMMERCIAL PLEDGE AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1000,000.00 02-20-1997 02-20-1998 8015483005 0017 801548
- ------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
22203-68TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
====================================================================================================================================
</TABLE>
THIS COMMERCIAL PLEDGE AGREEMENT IS ENTERED INTO BETWEEN WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. (REFERRED TO BELOW AS "GRANTOR"); AND
WASHINGTON FIRST INTERNATIONAL BANK (REFERRED TO BELOW AS "LENDER").
GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
AGREEMENT. The word "Agreement" means this Commercial Pledge Agreement, as
this Commercial Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Pledge Agreement from time to time.
COLLATERAL. The word "Collateral" means the following specifically
described property, which Grantor has delivered or agrees to deliver (or
cause to be delivered) immediately to Lender, together with all Income and
Proceeds as described below:
ASSIGNMENT OF PROCEEDS OF EXPORT LETTERS OF CREDIT ASSOCIATED WITH THE
TRANSACTIONS ON WHICH DISBURSEMENTS OF THIS LOAN ARE BASED AND MADE.
In addition, the word "Collateral" includes all property of Grantor
(however owned), in the possession of Lender (or in the possession of a
third party subject to the control of Lender), whether now or hereafter
existing and whether tangible or intangible in character, including without
limitation each of the following:
(A) ALL PROPERTY TO WHICH LENDER ACQUIRES TITLE OR DOCUMENTS OF TITLE.
(B) ALL PROPERTY ASSIGNED TO LENDER.
(C) ALL PROMISSORY NOTES, BILLS OF EXCHANGE, STOCK CERTIFICATES,
BONDS, SAVINGS PASSBOOKS, TIME CERTIFICATES OF DEPOSIT, INSURANCE
POLICIES, AND ALL OTHER INSTRUMENTS AND EVIDENCES OF AN
OBLIGATION.
(D) ALL RECORDS RELATING TO ANY OF THE PROPERTY DESCRIBED IN THIS
COLLATERAL SECTION, WHETHER IN THE FORM OF A WRITING, MICROFILM,
MICROFICHE, OR ELECTRONIC MEDIA.
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 WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC., its successors and assigns
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the indebtedness.
INCOME AND PROCEEDS. The words "Income and Proceeds" mean all present and
future income, proceeds, earnings, increases, and substitutions from or for
the Collateral of every kind and nature, including without limitation all
payments, interest, profits, distributions, benefits, rights, options,
warrants, dividends, stock dividends, stock splits, stock rights,
regulatory dividends, distributions, subscriptions, monies, claims for
money due and to become due, proceeds of any insurance on the Collateral,
shares of stock of different par value or no par value issued in
substitution or exchange for shares included in the Collateral, and all
other property Grantor is entitled to receive on account of such
Collateral, including accounts, documents, instruments, chattel paper, and
general intangibles.
INDEBTEDNESS. The word "indebtedness" means the indebtedness evidenced by
the Note, including all principal and interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as
well as all claims by Lender against Grantor, or any one or more of them,
whether existing now or later; whether they are voluntary or involuntary,
due or not due, direct or indirect, absolute or contingent, liquidated or
unliquidated; whether Grantor may be liable individually or jointly with
others; whether Grantor may be obligated as guarantor, surety,
accommodation party 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 Washington First International Bank, its
successor and assigns.
NOTE. The word "Note" means the note or credit agreement dated February 20,
1997, in the principal amount of $1,000,000.00 from WEB PRESS CORPORATION
AND WEB LEADER INTERNATIONAL, INC. to Lender, together with all renewals
of, extensions of, modifications of, refinancings of, consolidations of and
substitutions for the note or credit agreement.
OBLIGOR. The word "Obligor" means and includes without limitation any and
all persons or entitles obligated to pay money or to perform some other act
under the Collateral.
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.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all
of Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor 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. Grantor
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all Indebtedness against any and all such accounts.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor
represents and warrants to Lender that:
OWNERSHIP. Grantor is the lawful owner of the Collateral free and clear of
all security interests, liens, encumbrances and claims of others except
<PAGE>
02-20-1997 COMMERCIAL PLEDGE AGREEMENT PAGE 2
(CONTINUED)
================================================================================
as disclosed to and accepted by Lender in writing prior to execution of
this Agreement.
RIGHT TO PLEDGE. Grantor has the full right, power and authority to enter
into this Agreement and to pledge the Collateral.
BINDING EFFECT. This Agreement is binding upon Grantor, as well as
Grantor's heirs, successors, representatives and assigns, and is legally
enforceable in accordance with its terms.
NO FURTHER ASSIGNMENT. Grantor has not, and will not, sell, assign,
transfer, encumber or otherwise dispose of any of Grantor's rights in the
Collateral except as provided in this Agreement.
NO DEFAULTS. There are no defaults existing under the Collateral, and
there are no offsets or counterclaims to the same. Grantor will strictly
and promptly perform each of the terms, conditions, covenants and
agreements contained in the Collateral which are to be performed by
Grantor, if any.
NO VIOLATION. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
LENDER'S RIGHTS AND OBLIGATION WITH RESPECT TO COLLATERAL. Lender may hold the
Collateral until all the Indebtedness has been paid and satisfied and thereafter
may deliver the Collateral to any Grantor. Lender shall have the following
rights in addition to all other rights it may have by law;
MAINTENANCE AND PROTECTION OF COLLATERAL. Lender may, but shall not be
obligated to, take such steps as it deems necessary or desirable to
protect, maintain, insure, store, or care for the Collateral, including
payment of any liens or claims against the Collateral. Lender may charge
any cost incurred in so doing to Grantor.
INCOME AND PROCEEDS FROM THE COLLATERAL. Lender may receive all Income and
Proceeds and add it to all the Collateral. Grantor agrees to deliver to
Lender immediately upon receipt, in the exact form received and without
commingling with other property, all Income and Proceeds from the
Collateral which may be received by, paid, or delivered to Grantor or for
Grantor's account, whether as an addition to, in discharge of, in
substitution of, to in exchange for any of the Collateral.
APPLICATION OF CASH. At Lender's option, Lender may apply any cash,
whether included in the Collateral or received as Income and Proceeds or
through liquidation, sale, or retirement, of the Collateral, to the
satisfaction of the Indebtedness or such portion thereof as Lender shall
choose, whether or not matured.
TRANSACTIONS WITH OTHERS. Lender may (a) extend time for payment or other
performance, (b) grant a renewal or change in terms or conditions, or (c)
compromise, compound or release any obligation, with any one or more
Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems
advisable, without obtaining the prior written consent of Grantor, and no
such act or failure to act shall affect Lender's rights against Grantor or
the Collateral.
ALL COLLATERAL SECURES INDEBTEDNESS. All Collateral shall be security for
the Indebtedness, whether the Collateral is located at one or more offices
or branches of Lender and whether or not the office or branch where the
Indebtedness is created is aware of or relies upon the Collateral.
COLLECTION OF COLLATERAL. Lender, at Lender's option may, but need not,
collect directly from the Obligors on any of the Collateral all Income and
Proceeds or other sums of money and other property due and to become due
under the Collateral, and Grantor authorizes and directs the Obligors, if
Lender exercises such option, to pay and deliver to Lender all Income and
Proceeds and other sums of money and other property payable by the terms of
the Collateral and to accept Lender's receipt for the payments.
POWER OF ATTORNEY. Grantor irrevocably appoints Lender as Grantor's
attorney-in-fact, with full power of substitution, (a) to demand, collect,
receive, receipt for, sue and recover all Income and Proceeds and other
sums of money and other property which may now or hereafter become due,
owing or payable from the Obligors in accordance with the terms of the
Collateral; (b) to execute, sign and endorse any and all instruments,
receipts, checks, drafts and warrants issued in payment for the Collateral;
(c) to settle or compromised any and all claims arising under the
Collateral, and in the place and stead of Grantor, execute and deliver
Grantor's release and acquittance for Grantor; (d) to file any claim or
claims or take any action or institute or take part in any proceedings,
either in Lender's own name or in the name of Grantor, or otherwise, which
in the discretion of Lender may seem to be necessary or advisable; and (e)
to execute in Grantor's name and to deliver to the Obligors on Grantor's
behalf, at the time and in the manner specified by the Collateral, any
necessary instruments or documents.
PERFECTION OF SECURITY INTEREST. Upon request of Lender, Grantor will
deliver to Lender any and all of the documents evidencing or constituting
the Collateral. When applicable law provides more than one method or
perfection of Lender's security interest, Lender may choose the method(s)
to be used. Upon request of Lender, Grantor will sign and deliver any
writings necessary to perfect Lender's security interest. Grantor hereby
appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue the security
interest granted in this Agreement. This is a continuing Security Agreement
and will continue in effect even though all or any part of the Indebtedness
is paid in full and even though for a period of time Grantor may not be
indebted to Lender.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all cost, for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of the Collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (b)
preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (d) informing
Grantor about any of the above, whether or not Lender has or is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement.
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement; the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
<PAGE>
02-20-1997 COMMERCIAL PLEDGE AGREEMENT PAGE 3
(CONTINUED)
================================================================================
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral documents to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's deposit
accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being as adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor dies
or becomes incompetent. Lender, at its option, may, but shall not be
required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure the Event of Default.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Grantor has not been given a prior notice of a breach of the
same provision of this Agreement, it may be cured (and no Event of Default
will have occurred) if Grantor, after Lender sends written notice demanding
cure of such default, (a) cures the default within fifteen (15) days; or
(b), if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies:
ACCELERATE INDEBTEDNESS. Declare all Indebtedness, including any
prepayment penalty which Grantor would be required to pay, immediately due
and payable, without notice of any kind of Grantor.
COLLECT THE COLLATERAL. Collect any of the Collateral and, at Lender's
option and to the extent permitted by applicable law, retain possession of
the Collateral while suing on the Indebtedness.
SELL THE COLLATERAL. Sell the Collateral, at Lender's discretion, as a
unit or in parcels, at one or mote public or private sales. Unless the
Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Lender shall give or mail
to Grantor, or any of them, notice at least ten (10) days in advance of the
time and place of any public sale, or of the date after which any private
sale may be made. Grantor agrees that any requirement of reasonable notice
is satisfied if Lender mails notice by ordinary mail addressed to Grantor,
or any of them, at the last address Grantor has given Lender in writing. If
a public sale is held, there shall be sufficient compliance with all
requirements of notice to the public by a single publication in any
newspaper of general circulation in the county where the Collateral is
located, setting forth the time and place of sale and a brief description
of the property to be sold. Lender may be a purchaser at any public sale.
REGISTER SECURITIES. Register any securities included in the Collateral in
Lender's name and exercise any rights normally incident to the ownership of
securities.
SELL SECURITIES. Sell any securities included in the Collateral in a
manner consistent with applicable federal and state securities laws,
notwithstanding any other provision of this or any other agreement. If,
because of restrictions under such laws, Lender is or believes it is unable
to sell the securities in an open market transaction, Grantor agrees that
Lender shall have no obligation to delay sale until the securities can be
registered, and may make a private sale to one or more persons or to a
restricted group of persons, even though such sale may result in a price
that is less favorable than might be obtained in an open market
transaction, and such a sale shall be considered commercially reasonable.
If any securities held as Collateral are "restricted securities" as defined
in the Rules of the Securities and Exchange Commission (such as Regulation
D or Rule 144) or state securities departments under state "Blue Sky" laws,
or if Grantor is an affiliate of the issuer of the securities, Grantor
agrees that neither Grantor nor any member of Grantor's family will sell or
dispose of any securities of such issuer without obtaining Lender's prior
written consent.
FORECLOSURE. Maintain a judicial suit for foreclosure and sale of the
Collateral.
TRANSFER TITLE. Effect transfer of title upon sale of all or part of the
Collateral. For this purpose, Grantor irrevocably appoints Lender as its
attorney-in-fact to execute endorsements, assignments and instruments in
the name of Grantor and each of them (if more than one) as shall be
necessary or reasonable.
OTHER RIGHTS AND REMEDIES. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, at law, in equity, or otherwise.
APPLICATION OF PROCEEDS. Apply any cash which is part of the Collateral,
or which is received from the collection or sale of the Collateral, to
reimbursement of any expenses, including any costs for registration of
securities, commissions incurred in connection with a sale, attorney fees
as provided below, and court costs, whether or not there is a lawsuit and
including any fees on appeal, incurred by Lender in connection with the
collection and sale of such Collateral and to the payment of the
Indebtedness of Grantor to Lender, with any excess funds to be paid to
Grantor as the interests of Grantor may appear. Grantor agrees, to the
extent permitted by law, to pay any deficiency after application of the
proceeds of the Collateral to the Indebtedness.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by Lender to
pursue any remedy shall not exclude pursuit of any other remedy, and
an election to make expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure to perform, shall
not affect Lender's right to declare a default and to exercise its
remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF WASHINGTON. IF THERE IS A LAWSUIT, GRANTOR AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF KING
COUNTY, THE STATE OF WASHINGTON. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON.
<PAGE>
02-20-1997 COMMERCIAL PLEDGE AGREEMENT Page 4
(CONTINUED)
================================================================================
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or not there is
a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
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 parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to all Grantors. For
notice purposes, Grantor will keep Lender informed at all times of
Grantor'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 finding 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, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE AGREEMENT,
AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 20, 1997.
GRANTOR:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
BY: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, GENERAL MANAGER: WEB PRESS CORPORATION
BY: /s/ Gary B. Palmer
-----------------------------------------------
GARY B. PALMER, CHAIRMAN: WEB LEADER INTERNATIONAL, INC.
================================================================================
<PAGE>
STATEMENTS REQUIRED BY LAWS
AND EXECUTIVE ORDERS
Federal executive agencies, including the Small Business Administration (SBA),
are required to withhold or limit financial assistance, to impose special
conditions on approved loans, to provide special notices to applicants or
borrowers and to require special reports and data from borrowers in order
to comply with legislation passed by the Congress and Executive Orders issued by
the President and by the provisions of various inter-agency agreements. SBA has
issued regulations and procedures that implement these laws and executive
orders, and they are contained in Parts 112, 113, 116, and 117, Title 13, Code
of Federal Chapter 1, or Standard Operating Procedures.
This form contains a brief summary of the various laws and executive orders that
affect SBA's business loan programs and gives applicants and borrowers the
notices required by law or otherwise. The signatures required on the last page
provide evidence that SBA has given the necessary notices.
FREEDOM OF INFORMATION ACT
(5 U.S.C. 552)
This law provides, with some exceptions, that SBA must supply information
reflected in agency files and records to a person requesting it. Information
about approved loans that will be automatically released includes, among other
things, statistics on our loan programs (individual borrowers are not identified
in the statistics) and other information such as the names of the borrowers (and
their officers, directors, stockholders or partners), the collateral pledged to
secure the loan, the amount of the loan, its purpose in general terms and the
maturity. Proprietary data on a borrower would not routinely be made available
to third parties. All requests under this Act are to be addressed to the nearest
SBA office and be identified as a Freedom of Information request.
RIGHT TO FINANCIAL PRIVACY ACT OF 1978
(12 U.S.C. 3401)
This is notice to you as required by the Right to Financial Privacy Act of 1978,
of SBA's access rights to financial records held by financial institutions that
are or have been doing business with you or your business, including any
financial institutions participating in a loan or loan guarantee. The law
provides that SBA shall have a right of access to your financial records in
connection with its consideration or administration of assistance to you in the
form of a Government loan or loan guaranty agreement. SBA is required to provide
a certificate of its compliance with the Act to a financial institution in
connection with its first request for access to your financial records, after
which no further certification is required for subsequent accesses. The law also
provides that SBA's access rights continue for the term of any approved loan or
loan guaranty agreement. No further notice to you of SBA's access rights is
required during the term of any such agreement.
The law also authorizes SBA to transfer to another Government authority any
financial records included in an application for a loan, or concerning an
approved loan or loan guarantee, as necessary to process, service or foreclose
on a loan or loan guarantee or to collect on a defaulted loan or loan guarantee.
No other transfer of your financial records to another Government authority will
be permitted by SBA except as required or permitted by law.
SBA FORM 1261 (2-91) REF: SOP 50 10 USE 4-89 EDITION UNTIL EXHAUSTED
<PAGE>
FLOOD DISASTER PROTECTION ACT
(42 U.S.C. 4011)
Regulations have been issued by the Federal Insurance Administration (FIA) and
by SBA implementing this Act and its amendments. These regulations prohibit SBA
from making certain loans in an FIA designated floodplain unless Federal flood
insurance is purchased as a condition of the loan. Failure to maintain the
required level of flood insurance makes the applicant ineligible for any future
financial assistance from SBA under any program, including disaster assistance.
EXECUTIVE ORDERS -- FLOODPLAIN MANAGEMENT AND WETLAND PROTECTION (42 F.R. 26951
AND 42 F.R. 26961)
The SBA discourages any settlement in or development of a floodplain or a
wetland. This statement is to notify all SBA loan applicants that such actions
are hazardous to both life and property and should be avoided. The additional
cost of flood preventive construction must be considered in addition to the
possible loss of all assets and investments in future floods.
LEAD-BASED PAINT POISONING PREVENTION ACT
(42 U.S.C 4821 et seq.)
Borrowers using SBA funds for the construction or rehabilitation of a
residential structure are prohibited from using lead-based paint (as defined in
SBA regulations) on all interior surfaces, whether accessible or not, and
exterior surfaces, such as stairs, decks, porches, railings, windows and doors,
which are readily accessible to children under 7 years of age. A "residential
structure" is any home, apartment, hotel, motel, orphanage, boarding school,
dormitory, day care center, extended care facility, college or other school
housing, hospital, group practice or community facility and all other
residential or institutional structures where persons reside.
EQUAL CREDIT OPPORTUNITY ACT
(15 U.S.C. 1691)
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating
against credit applicants on the basis of race, color, religion, national
origin, sex, marital status or age (provided that the applicant has the capacity
to enter into a binding contract); because all or part of the applicant's income
derives from any public assistance program, or because the applicant has in good
faith exercised any right under the Consumer Credit Protection Act. The Federal
agency that administers compliance with this law concerning this creditor is the
Federal Trade Commission, Equal Credit Opportunity, Washington, D.C. 20580.
CIVIL RIGHTS LEGISLATION
All businesses receiving SBA financial assistance must agree not to
discriminate in any business practice, including employment practices and
services to the public, on the basis of categories cited in 13 C.F.R., Parts
112, 113 and 117 of SBA Regulations. This includes making their goods and
services available to handicapped clients or customers. All business borrowers
will be required to display the "Equal Employment Opportunity Poster"
prescribed by SBA.
<PAGE>
EXECUTIVE ORDER 11738 -- ENVIRONMENTAL PROTECTION
(38 F.R. 25161)
The Executive Order charges SBA with administering its loan programs in a manner
that will result in effective enforcement of the Clean Air Act, the Federal
Water Pollution Act and other environmental protection legislation. SBA must,
therefore, impose conditions on some loans. By acknowledging receipt of this
form and presenting the application, the principals of all small businesses
borrowing $100,000 or more in direct funds stipulate to the following:
1. That any facility used, or to be used, by the subject firm is not
cited on the EPA list of Violating Facilities.
2. That subject firm will comply with all the requirements of Section 114
of the Clean Air Act (42 U.S.C. 7414) and Section 308 of the Water Act
(33 U.S.C. 1318) relating to inspection, monitoring, entry, reports
and information, as well as all other requirements specified in
Section 114 and Section 308 of the respective Acts, and all
regulations and guidelines issued thereunder.
3. That subject firm will notify SBA of the receipt of any communication
from the Director of the Environmental Protection Agency indicating
that a facility utilized, or to be utilized, by subject firm is under
consideration to be listed on the EPA List of Violating Facilities.
OCCUPATIONAL SAFETY AND HEALTH ACT
(15 U.S.C. 651 ET SEQ.)
This legislation authorizes the Occupational Safety and Health Administration in
the Department of Labor to require businesses to modify facilities and
procedures to protect employees or pay penalty fees. In some instances the
business can be forced to cease operations or be prevented from starting
operations in a new facility. Therefore, in some instances SBA may require
additional information form an applicant to determine whether the business will
be in compliance with OSHA regulations and allowed to operate its facility after
the loan is approved and disbursed.
Signing this form as borrower is a certification that the OSA requirements that
apply to the borrower's business have been determined and the borrower to the
best of its knowledge is in compliance.
DEBT COLLECTION ACT OF 1982 DEFICIT REDUCTION ACT OF 1984
(31 U.S.C. 3701 et seq. and other titles)
These laws require SBA to aggressively collect any loan payments which become
delinquent. SBA must obtain your taxpayer identification number when you apply
for a loan. If you receive a loan, and do not make payments as they come due,
SBA may take one or more of the following actions:
-Report the status of your loan(s) to credit bureaus
-Hire a collection agency to collect your loan
-Offset your income tax refund or other amounts due to you from the
Federal Government
-Suspend or debar you or your company from doing business with the Federal
Government
-Refer your loan to the Department of Justice or other attorneys for
litigation
-Foreclose on collateral or take other action permitted in the loan
instruments.
<PAGE>
IMMIGRATION REFORM AND CONTROL ACT OF 1986
(Pub. L. 99-603)
If you are an alien who was in this country illegally since before January 1,
1982, you may have been granted lawful temporary resident status by the United
States Immigration and Naturalization Service pursuant to the Immigration Reform
and Control Act of 1986 (Pub. L 99-603). For five years from the date you are
granted such status, you are not eligible for financial assistance from the SBA
in the form of a loan or guaranty under section 7(a) of the Small Business Act
unless you are disabled or a Cuban or Haitian entrant. When you sign this
document, you are making the certification that the Immigration Reform and
Control Act of 1986 does not apply to you, or if it does apply, more than five
years have elapsed since you have been granted lawful temporary resident status
pursuant to such 1986 legislation.
APPLICANT'S ACKNOWLEDGEMENT
My signature acknowledges receipt of this form, that I have read it and that I
have a copy for my files. My signature represents my agreement to comply with
the requirements the Small Business Administration makes in connection with the
approval of my loan request and to comply, whenever applicable, with the hazard
insurance, lead-based paint, civil rights or other limitations in this notice.
Business Name: WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
-------------------------------------------------------
The Proprietor, each General Partner (or Limited Partner owning 20% or more),
each Guarantor, each Corporate Officer, each Director, each Stockholder owning
20% or more, and where appropriate, the spouses of each of these, must sign. The
person signing on behalf of the business must also sign individually.
Gary Palmer 2/20/97
- ------------------------------ --------------------
Gary Palmer Date
______________________________ ____________________
Wayne R. Marcouiller Date
______________________________ ____________________
G. Clifford Sanborn, Jr. Date
______________________________ ____________________
Rufus Sparague Date
______________________________ ____________________
Craig L. Mathison Date
SBA FORM 1261 (2-91) REF:SOP 50 10 USE 4-89 Edition until Exhausted
<PAGE>
AFFIDAVIT
I, Gary B. Palmer, General Manager of Web Press Corporation and Chairman of Web
Leader International, Inc, certify that all federal taxes, payroll taxes, real
estate taxes, and sales taxes are current and future taxes will be paid as they
become due.
/s/ Gary B. Palmer 2/20/97
- ---------------------------------- -------------------
Gary B. Palmer Date
General Manager of Web Press Crop.
Chairman of Web Leader Int'l, Inc.
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Small Business Administration OMB APPROVAL NO:3245-0200
SETTLEMENT SHEET EXPIRATION DATE: 3/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
LENDER (Name and Address - Include-Zip Code) Borrower (Name)
Washington First International Bank Web Press Corporation and Web Leader International, Inc.
9709 Third Avenue NE, Seattle, WA 98115 2203 - 68th Avenue South, Kent, WA 98032
- ------------------------------------------------------------------------------------------------------------------------------------
SBA Loan Number (10 digits)
EWCP 987816-30-00 SEA Lender Computes Interest on a 365/365 day basis.
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Sum of Prior disbursements $ _____________________ + This Disbursement $ ______________________ = Total $ _______________________
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The provision of 18 U.S.C. 1001 and 15 U.S.C. 645 provide certain criminal
penalties for making false statements, willfully overvaluing collateral, or
other prohibited acts. To induce SBA, or indirectly, to participate in this
loan, the Borrower, subject to these provisions, acknowledges receipt of
$_______________ on _________________ and certifies (1) that the proceeds at
this disbursement will be, and all previous disbursements have been, used in
accordance with the Loan Authorization, (2) that there has been no substantial
adverse change in financial condition, organization, operations, or fixed assets
since application for this loan was filed or since the previous disbursement and
(3) that there are no liens or encumbrances against the real or personal
property securing the loan except those disclosed in the application for this
loan.
Lender certifies that disbursement of the loan proceeds was made and the loan
proceeds were used as set forth below and in accordance with the Loan
Authorization by issuance of joint payee checks as detailed below, except checks
------------------------------------------------------------------
for cash operating capital, cash to reimburse borrower for evidence expenditures
- --------------------------------------------------------------------------------
made after loan approval date for such authorized use of proceeds, or as
- ------------------------------------------------------------------------
otherwise directed by the Loan Authorization, and that construction, paid with
- ---------------------------------------------
loan proceeds as listed below, has been completed. (ANY DEVIATION FROM THE LOAN
AUTHORIZATION MUST BE AUTHORIZED IN WRITING BY SBA PRIOR TO EXPENDITURE OF THE
LOAN FUNDS).
See Paragraph _______________, of Authorization "Use of Proceeds"
Subparagraph Name of Payee Date and Amount of Payment Purpose
To further induce SBA to participate in the loan, Lender certifies that neither
the Lender nor its Associates, officers, agents, affiliates or attorneys have
charged or will charge or receive, directly or indirectly, any bonus, fee,
commission, or other payment or benefit, or require a compensating balance,
Certificate of Deposit, or other security in connection with making or servicing
of this loan (other than those reported on SBA Forms 4 or 159 Compensation
Agreement"). It is understood that all fees not approved by SBA are prohibited,
except as may be specifically permitted by the Loan Authorization, SRA
regulations or the SBA Form 750 "Guaranty Agreement".
Lender: Borrower:
Washington First International Bank Web Press Corporation & Web Leader
- ------------------------------------ ----------------------------------
International, Inc.
-------------------
Signed /s/ Gary B. Palmer
By _________________________________ ---------------------------
Michael Lum, Vice-President Gary B. Palmer, General
Manager Web Press Corp.
Signed /s/ Gary B. Palmer
---------------------------
Gary B. Palmer, Chairman Web
Leader Int'l, Inc.
Date _________________________________ Date ___________________________________
This Certification must be signed and returned to the SBA immediately after each
disbursement. If there is a large number of checks, itemize separate sheets,
sign and attach hereto.
- --------------------------------------------------------------------------------
SBA Review By Title Date
- --------------------------------------------------------------------------------
The estimated burden for completion of this form is 1 hour per response. If you
have questions or comments concerning any other aspects of this information
collection, please contact Chief, Administrative Information Branch. U.S. Small
Business Administration, Washington, D.C. 20418 and Clearance Officer, Paperwork
Reduction Project (3246-0200). Office of Management and Budget, Washington, D.C.
20503.
SBA Form 1050 (8-93) REF SOP 70 50 Use 5-91 Copy to: SBA, Lender,
Edition Until Exhausted Borrower
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,000,000.00 02-20-1997 02-20-1998 8015483006 0017 801548
- ------------------------------------------------------------------------------------------------------------------------------------
Reference in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWER: WEB PRESS CORPORATION AND WEB LEADER LENDER: WASHINGTON FIRST INTERNATIONAL BANK
INTERNATIONAL, INC. 9709 THIRD AVENUE NORTHEAST
22203 - 58TH AVENUE SOUTH SUITE 110
KENT, WA 98032 SEATTLE, WA 98115
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF WEB PRESS CORPORATION AND
WEB LEADER INTERNATIONAL, INC. (THE "CORPORATION"), HEREBY CERTIFY that the
Corporation is organized and existing under and by virtue of the laws of the
State of Washington as a corporation for profit, with its principal office at
22203 - 68TH AVENUE SOUTH, KENT, WA 98032, and is duly authorized to transact
business in the State of Washington.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on FEBRUARY 20, 1997, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
<S> <C> <C>
GARY B. PALMER General Manager: WEB PRESS CORPORATION /s/ Gary B. Palmer
------------------
GARY B. PALMER Chairman: WEB LEADER INTERNATIONAL, INC. /s/ Gary B. Palmer
------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Washington First
International Bank ("Lender"), on such terms as may be agreed upon between
the Corporation and Lender, such sum or sums of money as in their judgment
should be borrowed, without limitation.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accomodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times, and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to excute and deliver to Lender any other written instruments, any
chattel paper, or any other collateral, of any kind or nature, which they
may in their discretion deem reasonably necessary or proper in connection
with or pertaining to the giving of the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or
to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and preform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements, including agreements confessing judgment against the
Corporation, as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request
advances and authorize payments under the line of credit until Lender
receives written notice of revocation of their authority: GARY B. PALMER,
General Manager of Web Press Corporation and Chairman of Web Leader
International, Inc.; and CRAIG L. MATHISON, Controller.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation,, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
<PAGE>
02-20-1997 CORPORATION RESOLUTION TO BORROW PAGE 2
(CONTINUED)
================================================================================
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON FEBRUARY 20, 1997 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR GENUINE
SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X /s/ Craig L. Mathison
----------------------------------
X
__________________________________
NOTE.: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
================================================================================
LASER PRO, Reg. U.S. Pat & T.M. Off., Ver. S.25 (c) 1997 CFI ProServices, Inc.
All rights reserved. [WA-C10KITZEXLC.L.N S.25.OVL]
5
<PAGE>
Statements Required by Laws
and Executive Orders
Federal executive agencies, including the Small Business Administration (SBA),
are required to withhold or limit financial assistance, to impose special
conditions on approved loans, to provide special notices to applicants or
borrowers and to required special reports and data from borrowers in order to
comply with legislation passed by the Congress and Executive Orders issued by
the President and by the provisions of various inter-agency agreements. SBA has
issued regulations and procedures that implement these laws and executive
orders, and they are contained in Parts 112, 113, 116, and 117, Title 13, Code
of Federal Chapter 1, or Standard Operating Procedures.
This form contains a brief summary of the various laws and executive orders that
affect SBA's business loan programs and gives applicants and borrowers the
notices required by law or otherwise. THe signatures required on the last page
provide evidence that SBA has given the necessary notices.
FREEDOM OF INFORMATION ACT
(5 U.S.C. 552)
This law provides, with some exceptions, that SBA must supply information
reflected in agency files and records to a person requesting it. Information
about approved loans that will be automatically released includes, among other
things, statistics on our loan programs (individual borrowers are not identified
in the statistics) and other information such as the names of the borrowers (and
their officers, directors, stockholders or partners) the collateral pledged to
secure the loan, the amount of the loan, its purpose in general terms and the
maturity. Proprietary data on a borrower would not routinely be made available
to third parties. All requests under this Act are to be addressed to the nearest
SBA office and be identified as a Freedom of Information request.
RIGHT TO FINANCIAL PRIVACY ACT OF 1978
(12 U.S.C. 3401)
This is notice to you as required by the Right to Financial Privacy Act of 1978,
of SBA's access rights to financial records held by financial institutions that
are or have been doing business with you or your business, including any
financial institutions participating in a loan to loan guarantee. The law
provides that SBA shall have a right of access to your financial records in
connection with its consideration or administration of assistance to you in the
form of a Government loan or loan guaranty agreement. SBA is required to provide
a certificate of its compliance with the Act to a financial institution in
connection with its first request for access to your financial records, after
which no further certification is required for subsequent accesses. The law also
provides that SBA's access rights continue for the term of any approved loan or
loan guaranty agreement. No further notice to you of SBA's access right is
required during the term of any such agreement.
The law also authorizes SBA to transfer to another Government authority any
financial records included in an application for a loan, or concerning an
approved loan or loan guarantee, as necessary to process, service or foreclose
on a loan or loan guarantee or to collect on a defaulted loan or loan guarantee.
No other transfer of your financial records to another Government authority will
be permitted by SBA except as required or permitted by law.
SBA FORM 1261 (2-91) REF: SOP 50 10 USE 4-89 Edition until Exhausted
<PAGE>
FLOOD DISASTER PROTECTION ACT
(42 U.S.C. 4011)
Regulations have been issued by the Federal Insurance Administration (FIA) and
by SBA implementing this Act and its amendments. These regulations prohibit SBA
from making certain loans in an FIA designated floodplain unless Federal flood
insurance is purchased as a condition of the loan. Failure to maintain the
required level of flood insurance makes the applicant ineligible for any future
financial assistance from SBA under any program, including disaster assistance.
EXECUTIVE ORDERS--FLOODPLAIN MANAGEMENT AND WETLAND PROTECTION (42 F.R. 26951
AND 42 F.R. 26961)
The SBA discourages any settlement in or development of a floodplain or a
wetland. This statement is to notify all SBA loan applicants that such actions
are hazardous to both life and property and should be avoided. The additional
cost of flood preventive construction must be considered in addition to the
possible loss of all assets and investments in future floods.
LEAD-BASED PAINT POISONING PREVENTION ACT
(42 U.S.C 4821 ET SEQ.)
Borrowers using SBA funds for the construction or rehabilitation of a
residential structure are prohibited from using lead-based paint (as defined in
SBA regulations) on all interior surfaces, whether accessible or not, and
exterior surfaces, such as stairs, decks, porches, railings, windows and doors,
which are readily accessible to children under 7 years of age. A "residential
structure" is any home, apartment, hotel, motel, orphanage, boarding school,
dormitory, day care center, extended care facility, college or other school
housing, hospital, group practice or community facility and all other
residential or institutional structures where persons reside.
EQUAL CREDIT OPPORTUNITY ACT
(1 5 U.S.C. 1691)
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating
against credit applicants on the basis of race, color, religion, national
origin, sex, marital status or age (provided that the applicant has the capacity
to enter into a binding contract); because all or part of the applicant's income
derives from any public assistance program, or because the applicant has in good
faith exercised any right under the Consumer Credit Protection Act. The Federal
agency that administers compliance with this law concerning this creditor is the
Federal Trade Commission, Equal Credit Opportunity, Washington, D.C. 20580.
CIVIL RIGHTS LEGISLATION
All businesses receiving SBA financial assistance must agree not to discriminate
in any business practice, including employment practices and services to the
public, on the basis of categories cited in 13 C.F.R., Parts 112, 113 and 117 of
SBA Regulations. This includes making their goods and services available to
handicapped clients or customers. All business borrowers will be required to
display the "Equal Employment Opportunity Poster" prescribed by SBA.
<PAGE>
EXECUTIVE ORDER 11738 -- ENVIRONMENTAL PROTECTION
(38 F.R. 25161)
The Executive Order charges SBA with administering its loan programs in a manner
that will result in effective enforcement of the Clean Air Act, the Federal
Water Pollution Act and other environmental protection legislation. SBA must,
therefore, impose conditions on some loans. By acknowledging receipt of this
form and presenting the application, the principals of all small businesses
borrowing $100,000 or more in direct funds stipulate to the following:
1. That any facility used, or to be used, by the subject firm is not
cited on the EPA list of Violating Facilities.
2. That subject firm will comply with all the requirements of Section 114
of the Clean Air Act (42. U.S.C. 7414) and Section 308 of the Water
Act (33 U.S.C. 1318) relating to inspection, monitoring, entry,
reports and information, as well as all other requirements specified
in Section 114 and Section 308 of the respective Acts, and all
regulations and guidelines issued thereunder.
3. That subject firm will notify SBA of the receipt of any communication
from the Director of the Environmental Protection Agency indicating
that a facility utilized, or to be utilized, by subject firm is under
consideration to be listed on the EPA List of Violating Facilities.
OCCUPATIONAL SAFETY AND HEALTH ACT
(15 U.S.C. 651 et seq.)
This legislation authorizes the Occupational Safety and Health Administration in
the Department of Labor to require businesses to modify facilities and
procedures to protect employees or pay penalty fees. In some instances the
business can be forced to cease operations or be prevented from starting
operations in a new facility. Therefore, in some instances SBA may require
additional information from an applicant to determine whether the business will
be in compliance with OSHA regulations and allowed to operate its facility after
the loan is approved and disbursed.
Signing this form as borrower is a certification that the OSA requirements that
apply to the borrower's business have been determined and the borrower to the
best of its knowledge is in compliance.
DEBT COLLECTION ACT OF 1982 DEFICIT REDUCTION ACT OF 1984.
(31 U.S.C. 3701 et seq. and other titles)
These laws require SBA to aggressively collect any loan payments which become
delinquent. SBA must obtain your taxpayer identification number when you apply
for a loan. If you receive a loan, and do not make payments as they come due,
SBA may take one or more of the following actions:
-Report the status of your loan(s) to credit bureaus
-Hire a collection agency to collect your loan
-Offset your income tax refund or other amounts due to you from the Federal
Government
-Suspend or debar you or your company from doing business with the Federal
Government
-Refer your loan to the Department of Justice or other attorneys for
litigation
-Foreclose on collateral or take other action permitted in the loan
instruments.
<PAGE>
IMMIGRATION REFORM AND CONTROL ACT OF 1986
(Pub. L. 99-603)
If you are an alien who was in this country illegally since before January 1,
1982, you may have been granted lawful temporary resident status by the United
States immigration and Naturalization Service pursuant to the Immigration Reform
and Control Act of 1986 (Pub. L 99-603). For five years from the date you are
granted such status, you are not eligible for financial assistance from the SBA
in the form of a loan or guaranty under section 7(a) of the Small Business Act
unless you are disabled or a Cuban or Haitian entrant. When you sign this
document, you are making the certification that the Immigration Reform and
Control Act of 1986 does not apply to you, or if it does apply, more than five
years have elapsed since you have been granted lawful temporary resident status
pursuant to such 1986 legislation.
APPLICANT'S ACKNOWLEDGMENT
My signature acknowledges receipt of this form, that I have read it and that I
have a copy for my files. My signature represents my agreement to comply with
the requirements the Small Business Administration makes in connection with the
approval of my loan request and to comply, whenever applicable, with the hazard
insurance, lead-based paint, civil rights or other limitations in this notice.
Business Name: WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
--------------------------------------------------------
The Proprietor, each General Partner (or Limited Partner owning 20% or more),
each Guarantor, each Corporate Officer, each Director, each Stockholder owning
20% or more, and where appropriate, the spouses of each of these, must sign. The
person signing on behalf of the business must also sign individually.
/s/ Gary Palmer 2/20/97
- ------------------------------- ----------------------
Gary Palmer Date
/s/ Wayne R. Marcouiller 2/20/97
- ------------------------------- ----------------------
Wayne R. Marcouiller Date
/s/ G. Clifford Sanborn, Jr. 2/24/97
- ------------------------------- ----------------------
G. Clifford Sanborn, Jr. Date
/s/ Rufus Sprague 2/21/97
- ------------------------------- ----------------------
Rufus Sprague Date
/s/ Craig L. Mathison 2/21/97
- ------------------------------- ----------------------
Craig L. Mathison Date
SBA FORM 1261 (2-91) REF: SOP 50 10 USE 4-89 EDITION UNTIL EXHAUSTED
<PAGE>
EXHIBIT 10H
(10h) being the Separation Agreement between Web Press Corporation and
Wayne R. Marcouiller, former President/General Manager of the
Company dated March 5, 1997.
<PAGE>
SEPARATION AND RELEASE AGREEMENT
THIS AGREEMENT is entered in to as of this _____ day of December, 1996 by
and among WEB PRESS CORPORATION, a Washington Corporation (hereinafter referred
to as "Employer"), WEB LEADER INTERNATIONAL, INC. (hereinafter referred to as
"Subsidiary") and WAYNE R. MARCOUILLER (hereinafter referred to as "Employee").
RECITALS
--------
WHEREAS, Employee has been employed by Employer as Employer's President and
General Manager, Employee has served as a trustee of Employer's 401(k) plan and
Employee has served at Employer's request as the Chairman of Subsidiary, a
wholly-owned subsidiary of Employer; and
WHEREAS, Employee's employment by Employer has been governed by the terms
of a certain Employment Agreement between Employer and Employee, dated November
14, 1980, as amended, and last renewed pursuant to an agreement dated March 31,
1995 (such employment agreement, as amended and as renewed, the "Employment
Agreement"); and
WHEREAS, Employer has determined that it is in its best interests to
recognize and reward Employee's more than twenty years of effective leadership
of the corporations as well as Employee's willingness to assist Employer to
accomplish an orderly turn over of the management of Employer; and
WHEREAS, the parties to this Agreement wish to clearly set forth the terms
and conditions of Employee's separation from employment;
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for good and valuable consideration, the receipt
and adequacy of which is acknowledged by each of the parties hereto, the parties
agree as follows:
EMPLOYER'S OBLIGATIONS
----------------------
1. SEVERANCE PAY.
-------------
(a) Employer shall pay Employee (in satisfaction of Employer's
obligations under Section 4(e) of the Employment Agreement) a severance bonus in
the amount of Four Hundred Thousand Dollars ($400,000.00) which amount Employer
agrees is due and payable upon execution of this Agreement.
1
<PAGE>
(b) Employer shall pay Employee on or before March 31, 1997 incentive
compensation calculated as described in Section 4(b) of the Employment Agreement
for the year 1996.
(c) Employer shall pay Employee on or before July 31, 1997 the
incentive compensation calculated under Section 4(d) of the Employment Agreement
for the first half of the year 1997.
(d) Employer shall reimburse Employee for all ordinary and necessary
business expenses incurred by the Employee prior to the date of execution of
this Separation Agreement and for which Employee submits reports to Employer on
or prior to the thirtieth (30th) day following the date of execution of this
Separation Agreement.
2. BENEFITS CONTINUATION. Employer shall continue for five years after
---------------------
the date of execution of this Separation Agreement, at Employer's sole expense,
the same insurance benefits coverage, including without limitation medical and
insurance, that Employee received while employed by Employer; provided, that
--------
Employer may satisfy this obligation by providing identical or greater coverage
under different insurance policies with the same or different insurance
carriers.
3. INDEMNIFICATION FROM LIABILITY ARISING FROM SERVICE.
---------------------------------------------------
(a) The capitalized terms in this Section 3 shall have the meanings
set forth in RCW 23B.08.500.
(b) Employer and Subsidiary shall indemnify and hold harmless
Employee against any and all Liability incurred with respect to any Proceeding
to which Employee is or is threatened to be made a Party because of Employee's
service as a Director or officer of Employer or Subsidiary or because, while
serving as a Director or officer of Employer or Subsidiary, Employee was serving
at the request of Employer or Subsidiary as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
and Employer and Subsidiary shall make advances of reasonable Expenses with
respect to such Proceeding, to the fullest extent permitted by law, without
regard to the limitations in RCW 23B.08.510 through 23B.08.550; provided, that
no such indemnity Employee from or on account of (1) acts or omissions of
Employee finally adjudged to be intentional misconduct or a knowing violation of
law; (2) conduct of Employee finally adjudged to be in violation of RCW
23B.08.310; or (3) any transaction with respect to which it was finally adjudged
that Employee personally received a benefit in money, property, or services to
which Employee was not legally entitled.
2
<PAGE>
(c) If, after the effective date of this Agreement, the Washington
Business Corporation Act (the, "Act") is amended to authorize further
indemnification of Directors or officers, then Employee shall be indemnified by
Employer and Subsidiary to the fullest extent permitted by the Act as so
amended.
(d) To the extent permitted by law, the rights to indemnification and
advance of reasonable Expenses conferred in this Section 3 shall not be
exclusive of any other right which Employee may have or hereafter acquire under
any statute, provision of the Articles of Incorporation or Bylaws of Employer or
Subsidiary, agreement, vote of shareholders or disinterested directors of
Employer or Subsidiary, or otherwise.
(e) If any provision of this Section 3 or any application thereof
shall be invalid, unenforceable, or contrary to applicable law, the remainder of
this Section 3, and the application of such provisions to circumstances other
than those as to which it is held invalid, unenforceable, or contrary to
applicable law, shall not be affected thereby.
4. INSURANCE. Employer shall, at Employers' sole expense and until two
---------
(2) years after Employee's death, maintain director's and officer's liability
insurance which includes Employee and Employee's estate as an insured. Such
insurance shall provide Employee and Employee's estate no less protection than
that provided by the insurance coverage Employer provided to its directors and
officers immediately prior to Employee's termination hereunder (the "Prior
Coverage"). Such coverage shall afford Employee and Employee's estate at least
the same annual limit of coverage and per loss limit of coverage, have no
greater deductible and insure against at least the same occurrences and claims
as the Prior Coverage.
EMPLOYEE'S OBLIGATIONS
----------------------
5. SEPARATION DATE. Employer, Subsidiary and Employee agree that
---------------
Employee's last date of employment as the President and General Manager of
Employer and as the Chairman of Subsidiary (as well as all other capacities in
which Employee acted as an officer or employee of the Employer or Subsidiary)
was December 20, 1996 (the "Separation Date").
6. RETURN OF PROPERTY. Employee warrants and represents that he will
------------------
within two (2) weeks following the date of execution of this Separation
Agreement return to Employer all Employer-owned property in his possession,
including, but not limited to, credit cards, all keys to Employer buildings or
property, all Employer-owned equipment and all Employer documents and papers,
customer lists, manuals, files, price lists, and all other trade secrets and/or
confidential Employer information.
3
<PAGE>
AUTOMOBILE PURCHASE
-------------------
7. TITLE TRANSFER. Employer shall transfer to Employee, immediately upon
--------------
Employer's execution of this Agreement, title to the Cadillac Concours
automobile, vehicle identification number IG6KF52Y7RU241666 (the "Automobile"),
which Employer has provided for Employee's use during the term of Employee's
employment by Employer.
8. PURCHASE PRICE. Employee shall pay, immediately upon the transfer of
--------------
title described in Section 7, to Employer the wholesale value of the Automobile,
in exchange for the transfer of title provided for in Section 7.
MUTUAL WAIVER AND RELEASE OF CLAIMS
-----------------------------------
9. WAIVER AND RELEASE OF CLAIMS BY EMPLOYEE.
----------------------------------------
(a) Except for (i) obligations set forth in or arising under this
Agreement, and (ii) Employer's and Subsidiary continuing obligations referenced
in Section 3(d) to indemnify and hold Employee harmless from and against any
third party claims arising out of the Relationships (defined below), Employee on
the one hand and Employer and Subsidiary on the other hand each hereby waive and
release any and all claims, causes of action and rights, whether known or
unknown, contingent or noncontingent, contractual or otherwise against the other
or any of the other's related, affiliated or subsidiary organizations, and each
of their respective directors, officers, agents, representatives and employees,
past and present, and each of their successors and assigns (for each of
Employee, Employer and Subsidiary, such individuals and entities that they are
releasing are their "Respective Releasees") arising out of Employee's employment
with Employer or Subsidiary or Employee's service as an officer or director of
the Employer or Subsidiary or as a trustee of the Plan (together, the
"Relationships") or the termination thereof.
(b) Employee acknowledges that among the claims that he is releasing
may be claims for wrongful discharge, breach of contract, negligent or
intentional infliction of emotional distress, defamation, violations of Title
VII of the Civil Rights Act, Age Discrimination in Employment Act, Fair Labor
Standards Act, the Washington State Human Rights Act (RCW 49.60), Washington
state wage and hour laws as well as any other statutes, administrative
regulations or legal doctrines governing claims arising out of or relating to
employment or the termination thereof.
(c) Employee acknowledges and agrees that he is not entitled to any
payments or benefits from the Employer or Subsidiary other than those expressly
provided for in this Agreement.
4
<PAGE>
WARRANTIES AND INDEMNIFICATION
------------------------------
10. Warranties of Employer. Employer represents and warrants to Employee
----------------------
that it has full corporate power and authority to enter into this Agreement
without need of any additional consent or approval of any third party; that all
corporate approvals and proceedings necessary for the execution, delivery and
performance of this Agreement have been obtained; that there are no charter,
by-law or other corporate restrictions nor any agreements under which Employer
is bound which would prevent it from fully performing its obligations hereunder
or thereunder; and that this Agreement constitutes and will constitute valid
and binding obligations of Employer, enforceable in accordance with their terms,
subject only to applicable bankruptcy, reorganization, insolvency or similar
laws and principles of public policy.
11. Warranties of Subsidiary. Subsidiary represents and warrants to
------------------------
Employee that it has full corporate power and authority to enter into this
Agreement without need of any additional consent or approval of any third party;
that all corporate approvals and proceedings necessary for the execution,
delivery and performance of this Agreement have been obtained; that there are no
charter, by-law or other corporate restrictions nor any agreements under which
Subsidiary is bound which would prevent it from fully performing its obligations
hereunder or thereunder; and that this Agreement constitutes and will constitute
valid and binding obligations of Subsidiary, enforceable in accordance with
their terms, subject only to applicable bankruptcy, reorganization, insolvency
or similar laws and principles of equity or public policy.
12. Warranties of Employee. Employee represents and warrants to Employer
----------------------
and Subsidiary that he has full power and authority to enter into this
Agreement, without need of any additional consent or approval of any third
party; and that this Agreement constitutes a valid and binding obligation of
Employee, enforceable in accordance with its terms, subject only to applicable
bankruptcy, reorganization, insolvency or similar laws and principles of equity
or public policy.
13. Indemnification for Breach. Employee on the one hand and Employer and
--------------------------
Subsidiary on the other hand shall each indemnify and hold harmless the other
and the other's respective successors and assigns, from and against any and all
loss, liability, damage and expense (including, without limitation, legal fees)
which may be suffered or incurred resulting from, related to or arising out of
any breach of any warranty or non-fulfillment of any covenant contained in this
Agreement. The indemnification obligations under this Section 13 shall survive
and continue after the execution and performance of this Agreement.
5
<PAGE>
MISCELLANEOUS
-------------
14. Free and Voluntary Act of Employee. Employee agrees that he is
----------------------------------
entering into this Agreement as a free and voluntary act and that he has been
given at least twenty-one (21) days to decide whether to sign this Agreement,
and he signs it only after full reflection and analysis. Employee further
acknowledges that he has had an opportunity to obtain an attorney's independent
counsel and advice, and that he has read and understands the complete Agreement.
15. Reason for Separation. Employer hereby acknowledges and agrees that
---------------------
Employee's separation from employment is not for any of the reasons listed in
Section 7 of the Employment Agreement, but rather is due solely to his
retirement after twenty years of service.
16. Severability. If for any reason any provision or any portion of any
------------
provision of this Agreement, or the application of any provision or portion
thereof in a particular context or to a particular situation or person, should
be held invalid or in violation of law by any court or other tribunal, then the
application of such provision in other contexts and to other situations and
persons shall not be affected thereby, and the remaining provisions hereof shall
nevertheless remain in full force and effect and shall be construed and enforced
to the fullest extent allowed by law.
17. Revocation. This Agreement may be revoked by Employee by returning
---------
payment in full along with written notice of revocation to Employer and
Subsidiary at the following address within seven (7) days of Employee's
execution of the Agreement:
22023 68th Avenue South
Kent, Washington 98032
Fax No.: (206) 395-4492
Attn: President
Unless revoked in accordance with this paragraph, this Agreement will become
final and irrevocable on the eighth day following Employee's execution of the
Agreement.
18. No Admission of Liability. This Agreement shall not be construed as an
-------------------------
admission by Employer, Subsidiary or Employee of any liability, breach of any
agreement between Employer or Employee or between Subsidiary and Employer or
violation by Employer, Subsidiary or Employee or any statute, law or regulation.
19. Enforcement. In any action to enforce any of the provisions of this
-----------
Agreement, the prevailing party shall be entitled to recover its reasonable
attorney's fees and costs, in addition to any other damages and remedies
available at law or in equity. Employer
6
<PAGE>
shall exercise its best efforts to defend this Agreement against attack or
avoidance by third parties (including Employer's shareholders), and shall
indemnify and hold Employee harmless from any and all expense (including legal
fees and costs) reasonably incurred by him in defending or assisting in the
defense of any claim or action pertaining to this Agreement.
21. TERMINATION OF OTHER AGREEMENTS. This Agreement shall supersede and
-------------------------------
terminate all prior agreements between Employer and Employee and between
Subsidiary and Employee.
[The Remainder of This Page Is Intentionally Blank]
7
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
EMPLOYER: WEB PRESS CORPORATION
By: /s/ Gary Palmer By: /s/ Craig L. Mathison
------------------------ ---------------------------
Its: General Manager Its: Secretary
----------------------- ---------------------------
Date: March 5, 1997 Date: March 5, 1997
---------------------- ---------------------------
EMPLOYEE: WAYNE R. MARCOUILLER
/s/ Wayne R. Marcouiller
---------------------------------
Date: 5 March, 1997
---------------------------
SUBSIDIARY: WEBLEADER INTERNATIONAL, INC.
_________________________________
By: /s/ Gary Palmer
---------------------------
Its: Chairman
---------------------------
Date: March 5, 1997
---------------------------
STATE OF WASHINGTON)
) ss.
County Of King )
I, Jo E. Bunger, Notary Public in and for the State of Washington, do hereby
certify that on this 5th day of March, 1997, personally appeared to me the above
individuals who executed the within instrument and acknowledged that they signed
the same as free and voluntary act and deed for the uses and purposes herein
mentioned.
/s/ J. E. Bunger
---------------------------------------------
My appointment expires May 15, 1998. Notary
Public in and for the State of Washington
residing at Auburn.
