<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1998.
REGISTRATION NO. ___-________
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Credit Concepts, Inc.
----------------------------------------------
(Name of small business issuer in its charter)
Oregon 6141 93-1236587
- --------------------- --------------------- -------------------
(State or jurisdic- (Primary Standard (IRS Employer
tion of incorporation Industrial Classi- Identification No.)
or organization) fication Code Number)
2149 Centennial Plaza, Suite 2, Eugene, Oregon 97401 (541) 342-8545
--------------------------------------------------------------------------
(Address and telephone number of principal executive offices)
(Same)
---------------------------------------------------
(Address of principal place of business or intended
principal place of business)
Tom W. Palmer, President
2149 Centennial Plaza, Suite 2
Eugene, Oregon 97401
(541) 342-8545
Copy to:
Mike Liles, Jr.
Karr Tuttle Campbell
1201 Third Avenue, Suite 2900
Seattle, Washington 98101
(206) 224-8068
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(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public ___________.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________________________________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
===============================================================================
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- -------------------------------------------------------------------------------
Title of Each Dollar Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities To To Be Offering Price Aggregate Registration
Be Registered Registered Per Unit Offering Price Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment
Certificates $10,000,000.00 $1,000,000.00 $10,000,000.00 $2,780
- -------------------------------------------------------------------------------
</TABLE>
NOTE. If the filing fee is calculated pursuant to Rule 457(o) under
the Securities Act, only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for that class
of securities and the amount of registration fee need to appear in the
Calculation of Registration Fee table. Any difference between the dollar
amount of securities registered for such offering and the dollar amount of
securities sold may be carried forward on a future registration statement
pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Prospectus dated November __, 1998
CREDIT CONCEPTS, Inc.
SHORT-TERM and LONG-TERM INVESTMENT CERTIFICATES
Minimum Investment: $5,000
YOU MAY LIQUIDATE YOUR CERTIFICATES PRIOR TO MATURITY UPON 90 DAYS NOTICE
TO THE COMPANY, BUT IF YOU DO, YOU WILL EARN NO INTEREST ON THE CERTIFICATES
DURING THE NOTICE PERIOD.
Credit Concepts, Inc. is offering $5,000,000 of fixed-rate Short-Term
Investment Certificates and $5,000,000 of fixed-rate Long-Term Investment
Certificates directly to investors. The amount of Certificates that you may
purchase in the aggregate may not exceed 10% of your net worth.
The interest rate for the Certificates is fixed. Initially this interest
rate is 8.00% annually for the Short-Term Certificates and 8.75% annually for
the Long-Term Certificates. The terms of the Investment Certificates are
initially two years for the Short-Term Certificates and four years for the Long-
Term Certificates. The interest rate and the term may be changed for new
Investment Certificates of either type at the discretion of the Company from
time-to-time to reflect market and other conditions. The interest rate and
date of maturity for each Certificate are determined at the time of its sale.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
For certain risks of which you should be aware, see Risk Factors beginning
at page __.
<PAGE>
- -------------------------------------------------------------------------------
Please read this entire Prospectus. In order to invest, fill out the
Subscription Form on the inside back cover of this Prospectus and forward it,
together with a check or money order for the purchase price, to: Tom W. Palmer,
President, or Eugene C. Albert, Vice-President, Credit Concepts, Inc., 2149
Centennial Plaza, Suite 2, Eugene, Oregon 97401, telephone (541) 342-8545.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
Offering Summary
Risk Factors
Use of Proceeds
Capitalization
Statement of Income
Management's Discussion and Analysis of Results of Operations
Business
Property
Management
Principal Shareholders
Description of Securities
Plan of Distribution
Legal Matters
Experts
Additional Information
Financial Statements
Subscription Form
<PAGE>
===============================================================================
OFFERING SUMMARY
THIS SUMMARY HIGHLIGHTS SOME OF THE INFORMATION IN THIS PROSPECTUS.
THE COMPANY:
- ------------
Credit Concepts, Inc. is in the business of purchasing retail installment
Contracts that have been originated by regional used automobile dealers in
connection with the financing of used Vehicles. The interest receivable on the
Contracts is significantly greater than the Company's cost of borrowed funds.
The Company seeks to collect the principal and interest due, and to recover on
the Vehicles that serve as collateral on defaulted Contracts, with sufficient
efficiency to cover all its costs and return a profit. The Company's
operations consist primarily of evaluating which Contracts to purchase,
negotiating the terms of the purchase, and arranging for the Company's
financing of the purchase.
The Company has recently been granted a Consumer Finance License by the
Oregon Department of Consumer and Business Services, which will allow the
Company to make Loans directly to purchasers of used automobiles in addition to
purchasing the loan in the form of Contracts from the dealers after the loans
have been made.
The Company commenced operations in October, 1997. Its principal offices
are located at 2149 Centennial Plaza, Suite 2, Eugene, Oregon 97401, and its
telephone number is (541) 342-8545. Unless the context otherwise requires, as
used in this Prospectus, the term "Company" means Credit Concepts, Inc., which
was incorporated in the State of Oregon on January 1, 1998, and its
predecessor, Credit Concepts, L.L.C., which was organized under the Limited
Liability Company laws of the State of Oregon on August 29, 1997.
SECURITIES:
- -----------
$10,000,000 of Investment Certificates ("Investment Certificates" or
"Certificates"), consisting of $5,000,000 of fixed-rate Short-Term Investment
Certificates and $5,000,000 of fixed-rate Long-Term Investment Certificates, in
denominations of $1,000.
TERM:
- -----
The terms of the Investment Certificates are initially two years for the
Short-Term Certificates and four years for the Long-Term Certificates. The
term may be changed for new Investment Certificates of either type at the
discretion of the Company from time-to-time to reflect market and other
conditions. However, the term for Long-Term Certificates will not exceed five
years and the term for Short-Term Certificates will not be less than eighteen
months. The date of maturity for each Certificate is determined at the time of
its sale to an investor. Any changes in the terms applicable to new
Certificates will have no effect upon the terms applicable to Certificates then
outstanding.
INTEREST RATE:
- --------------
Interest on the Certificates accrues at a fixed rate, which initially is
8.00% annually for the Short-Term Certificates and 8.75% annually for the Long-
Term certificates. The interest rate may be changed for new Investment
Certificates of either type at the discretion of the Company from time-to-time
to reflect market and other conditions. However, the interest rate for either
type of Certificate will not exceed 12% annually nor be less than 6% annually.
The interest rate for each Certificate is determined at the time of its sale to
an investor. Any changes in the interest rate applicable to new Certificates
will have no effect upon the interest rate applicable to Certificates then
outstanding.
MINIMUM INVESTMENT:
- -------------------
$5,000.
INVESTMENT LIMITATIONS:
- -----------------------
Purchases of Certificates in the aggregate may not exceed 10% of your net
worth, and you must so represent in the Subscription Form.
COLLATERAL:
- -----------
The Investment Certificates are not secured by any form of collateral.
SUBORDINATION:
- --------------
The Investment Certificates are subordinated to all bank indebtedness for
moneys borrowed. At July 31, 1998, the Company had $2,687,431 of bank
indebtedness outstanding. This bank indebtedness is secured by all of the
Company's assets, including Contracts receivable.
SINKING FUND:
- -------------
The Company will not maintain a sinking fund for the Certificates.
NO TRUSTEE:
- -----------
The Certificates are not subject to the Trust Indenture Act of 1939, and
there is no indenture or indenture trustee empowered to act on your behalf
should the Company default in the payment to you of principal or interest on
the Certificates.
RISK FACTORS:
- -------------
See "Risk Factors" for a discussion of certain risks in this offering to
which you would be subject as an investor.
<PAGE>
===============================================================================
FINANCIAL INFORMATION
---------------------
Set forth below is summary financial data for the Company's operations
from inception to December 31, 1997 and for the seven months ended July 31,
1998, as well as a balance sheet showing the Company's financial position at
July 31, 1998. In interpreting this information please refer to the financial
statements and footnotes at the end of this Prospectus.
<TABLE>
<CAPTION>
INCOME STATEMENT 1998 1997
------------ ------------
<S> <C> <C>
Total Revenues $ 471,256 $ 6,147
Interest Expense $ 154,671 $ 3,815
Provision for Credit Losses 231,129 -
Salaries 79,017 30,408
Total Expenses $ 536,828 $ 49,305
Net Income (Loss) $ (65,572) $ (43,158)
BALANCE SHEET July 31,
1998
------------
Assets
Cash $ 55,003
Net Finance Receivables 4,233,810
Total Assets $ 4,483,631
Liabilities
Bank Line of Credit $ 2,687,431
Subordinated Notes Payable to Stockholders 1,165,976
Total Liabilities $ 4,192,361
Total Stockholders' Equity $ 291,270
Total Liabilities and Stockholders' Equity $ 4,483,631
</TABLE>
===============================================================================
<PAGE>
RISK FACTORS
------------
The following are certain risks that you should consider in deciding
whether or not to purchase Investment Certificates in this offering. These
Risk Factors are not presented in any particular order of significance. When
reviewing this Prospectus, you should consider other possible risks that might
apply in addition to those discussed below and the extent that certain risks
might present a special issue for you based upon your individual circumstances
and financial needs.
UNSECURED, UNGUARANTEED OBLIGATIONS.
- ------------------------------------
Investment Certificates are unsecured general obligations of the Company.
There is no collateral or security interest securing repayment of the
Certificates, and repayment of the Certificates is not guaranteed or insured by
any governmental agency or third party. As an unsecured general creditor of
the Company, in the event of liquidation of the Company, you as a holder of
Certificates would share equally with other general creditors of the Company in
the remaining unsecured assets of the Company, if any. However, Investment
Certificates are subordinated to the Company's present and future bank
indebtedness, and the bank indebtedness is secured by all of the Company's
assets, including Contracts receivable. These Contracts receivable, which
constitute the Company's principal asset, would first be applied to satisfy
that bank indebtedness upon any liquidation of the Company before being
available to general creditors such as you as a holder of the Investment
Certificates. At July 31, 1998, the Company had $2,687,431 of secured bank
borrowings outstanding and $301,500 of unsecured borrowings of all kinds. See
"Capitalization."
NON-SELF-AMORTIZING OBLIGATIONS.
- --------------------------------
The Investment Certificates do not provide for the payment of any amount
of principal prior to maturity, whether in installments or otherwise, and the
entire amount of the principal must be paid by the Company at the date of
maturity or at such earlier date as may be required under a pre-maturity
liquidation notice. The ability of the Company to pay you upon maturity of the
Certificates or upon a pre-maturity liquidation notice will depend upon the
status of the Company's cash and credit resources at the time such payment is
required.
ABSENCE OF SINKING FUND.
- ------------------------
The Company has not established a sinking fund for the Investment
Certificates in part because the Investment Certificates do not have a common
maturity date but instead the maturity date of each Certificate is determined
at the time it is purchased. A sinking fund would provide a reserve for the
payment of principal and interest on the Certificates. Although the sale of
the Certificates in this offering will increase the amount of assets and bank
credit available to the Company, there can be no assurance that sufficient
funds will actually be available to pay the interest or principal on the
Certificates at the time that they become due.
NO TRADING MARKET FOR INVESTMENT CERTIFICATES.
- ----------------------------------------------
Although the Certificates may be transferred on the Company's Certificate
ownership records by signing the form of assignment on the back of the
Certificate and delivering it to the new owner, there is no trading market for
the Company's Investment Certificates, and the Company does not expect that a
trading market will arise in the future. Accordingly, you should be prepared
to rely solely upon the Company's ability to repay the Certificates as general
unsecured obligations when they become due.
LIMITED OPERATING HISTORY; UNCERTAINTY OF PROFITABILITY.
- --------------------------------------------------------
The Company commenced operations in October, 1997 and through July 31,
1998 has generated $477,403 of revenues and $108,730 of net operating losses.
At July 31, 1998, the Company had approximately $55,003 in cash, $4,233,810 in
net Contract receivables (after deducting an allowance for credit losses of
$191,000 and adding capitalized loan origination costs of $35,148 and interest
receivable on Contracts of $64,500), approximately $4,192,361 of indebtedness
of all types and a shareholders' equity of approximately $291,270. The Company
has no relevant operating history upon which an evaluation of its prospects can
be made. Accordingly, there can be no assurance that the Company's operations
will generate sufficient revenues, earnings or cash flows to pay the principal
and interest on the Certificates when they become due.
COMPANY'S RELIANCE UPON ONGOING FINANCING.
- ------------------------------------------
The nature of the Company's business is such that it is required to engage
in ongoing financing in order to have the funds to continue to purchase
Contracts. To date the Company has relied primarily upon bank borrowings and
equity capital from its founders and others for this purpose. However, the
Company has begun to reach the limits of its presently available bank credit
and, like certain of its competitors, is now seeking to finance its Contracts
through the sale of unsecured Investment Certificates. The Company intends to
finance the purchase of its Contracts in this manner for the indefinite future.
The Company has not previously attempted to finance its purchase of Contracts
in this manner, and the success of this approach is uncertain. Should the
Company fail to sell sufficient Investment Certificates on an ongoing basis to
enable it to purchase a satisfactory amount of Contracts, the Company will be
required to seek other methods of financing the Contracts or the Company would
self-liquidate over time as Investment Certificates and Contracts mature. The
Company does not presently have any arrangements for alternate financing and
may not be able to timely arrange alternate financing on acceptable terms
should it seek to do so. There can be no assurance that the Company will be
able to continue to secure bank-lines-of credit in the future beyond existing
renewal dates. In this regard, Tom W. Palmer, the Company's President, and
Eugene C. Albert, the Company's Vice-President, have each personally guaranteed
an aggregate of $3,000,000 under the Company's secured bank line-of-credit, and
Ted W. Palmer, the father of Tom W. Palmer and a Director of the Company, has
personally guaranteed an aggregate of $1,000,000 under that line-of-credit.
Also, Tom W. Palmer, Eugene C. Albert and Ted W. Palmer have acted as
accommodation borrowers for a $450,000 unsecured bank loan, all of the proceeds
from which have in turn been loaned to the Company for working capital,
primarily to purchase Contracts. Further, Tom W. Palmer and Eugene C. Albert
are co-borrowers with the Company for two loans in the aggregate principal
amount of $110,000, all of the proceeds from which have been used by the
Company for working capital, primarily to purchase Contracts. Eugene C. Albert
has collateralized these two loans with real estate owned by him. There can be
no assurance that any of these persons will be willing to guarantee any
additional amounts under these lines-of-credit or act as further accommodation
borrowers, or that if they should do so the banks would extend any additional
credit to the Company.
PLANNED SUBSTANTIAL INCREASE IN CORPORATE INDEBTEDNESS.
- -------------------------------------------------------
The Company plans significant growth in the Company's business in ensuing
years through the purchase of Contracts and the origination of Loans.
Virtually all of this increase in business is expected to be financed by a
corresponding increase in Company indebtedness of all types, including bank
indebtedness that will be secured and prior in right of payment to the
Investment Certificates in this offering, as well as unsecured debt that will
be on a parity with the Investment Certificates. The Investment Certificates
are unsecured, but the proceeds from their sale are used to purchase Contracts
that serve as collateral for the bank indebtedness. For this reason, the
unsecured debt represented by the Certificates are treated as equity for
purposes of the capital minimums that must be maintained under the bank line-of-
credit agreement. As a result, sale of the Certificates in this offering and
the purchase of Certificates with the proceeds will increase the ability of the
Company to borrow under the terms of its bank line-of-credit and is expected to
allow the Company to increase the size of its bank line-of-credit should it
desire to do so. Although this increase in business is expected to increase
assets and revenues and generate earnings, it will concurrently increase the
level of debt service required, and should the Company's anticipated
operational success fail to materialize as planned, the increased burden of
this debt service could adversely affect the Company's ability to timely pay
interest and principal on the Certificates when they become due.
COMPANY'S LACK OF CREDIT LOSS EXPERIENCE FOR CONTRACTS.
- -------------------------------------------------------
The allowance for credit losses on the Company's balance sheet at July 31,
1998 is approximately 4.4% of the Company's Contracts receivable at that date,
and the provision for credit losses on the Company's statement of income for
the seven months ended July 31, 1998 is approximately 49% of the Company's
total revenues for that period. See "Financial Statements." The Company
commenced business in October, 1997 and has not yet had sufficient operating
experience to confirm the adequacy of the allowances and provisions for credit
losses on its Contracts reflected on the Company's financial statements. As
the Company develops credit loss experience, the allowance for credit losses
will be appropriately adjusted through appropriate charges to the provision for
credit losses. Because the provision for credit losses is such a significant
portion of the charge against the Company's revenues in the determination of
net income, any significant adjustments to the allowance for credit losses
through significant charges against the provision for credit losses is apt to
have a material effect upon net income, which could be adverse. In this
regard, the Contracts in the Company's loan portfolio are primarily "higher
risk" loan contracts originated by dealers in used vehicles. Furthermore, the
statistics for credit losses on used vehicle contracts in the industry within
recent years reflect to some extent the health of the U.S. economy during that
period, and may not prove valid during periods of recession, although the
Company believes that the relationship between the availability of automobile
transportation and job retention for the underlying borrowers on the Company's
Contracts may be sufficient to render such credit losses to some extent
recession-resistant.
POSSIBLE MULTIPLE PRE-MATURITY LIQUIDATION NOTICES.
- ---------------------------------------------------
Should the Company receive over a short period of time an unexpectedly
large number of pre-maturity liquidation notices from investors in the
Certificates, the Company may not then have available sufficient cash and
credit resources to retire these Certificates in an orderly fashion and may be
required under the circumstances to liquidate Contracts in the market on
unfavorable terms in order to meet its obligations under the terms of the
Certificates, to the Company's detriment. Such an event might occur because of
liquidity requirements of investors in the event of a sharp economic recession,
or because of a sudden appearance of alternative investments with more
attractive rates within the areas in which the Company's Investment
Certificates have been sold, as well as for other possible reasons. There can
be no assurance, should the Company receive an unanticipated volume of
liquidation notices within a short period of time, that the Company would be
able to sell sufficient Contracts to meet these obligations, and the Company
might be required to make payment beyond the 90 day period provided in the
Certificates, which would constitute a default under the terms of the
Certificates and the cross-default provisions of the Company's secured bank
loans.
BANK LOAN COVENANTS.
- --------------------
The Company has entered into loan agreements and issued promissory notes
in connection with the Company's bank lines-of-credit. Those agreements and
promissory notes require the Company to comply with and maintain various
financial and other covenants in order to avoid default. Those covenants
include the necessity to maintain a minimum net worth of $300,000 by
December 31, 1998 and the need for the Company to comply with payment and
performance obligations of the Company's bank lines-of-credit, Investment
Certificates and other contractual obligations. Any default upon the Company's
bank lines-of-credit, which are secured by all of the Company's assets,
including Contracts receivable, and senior in right of payment to the
Investment Certificates, could immediately severely and adversely affect the
Company's ability to pay the Investment Certificates. The Investment
Certificates do not have cross-default provisions, so that any default upon the
Company's bank indebtedness or other obligations would not result in an
acceleration of maturities or provide other default remedies to you as a holder
of the Investment Certificates. See "Description of Securities - Investment
Certificates."
RELIANCE UPON SKILLS AND EFFORTS OF MANAGEMENT AND EMPLOYEES.
- -------------------------------------------------------------
The Company is highly dependent upon the skills and efforts of its
employees, including those that serve as its management, for the operation of
its business. However, except for the Company's General Manager, the Company
does not have employment contracts with any of its management or employees, nor
does it maintain key man insurance on any of their lives, except for insurance
on the life of the General Manager and insurance payable to the Company's bank.
There is no guarantee that any of the Company's current employees will continue
to be employed by the Company in the future, and if key employees should
unexpectedly leave the employment of the Company, voluntarily or by reason of
death or disability, such could have a material adverse effect on the Company
and its ability to pay Investment Certificates. However, Tom W. Palmer, the
Company's President, and Eugene C. Albert, the Vice-President, have each
personally guaranteed an aggregate of $3,000,000 under the Company's secured
bank line-of-credit, and Ted W. Palmer, the father of Tom W. Palmer and a
Director of the Company, has personally guaranteed an aggregate of $1,000,000
under that line-of-credit. Also, Tom W. Palmer, Eugene C. Albert and Ted W.
Palmer have acted as accommodation borrowers for a $450,000 unsecured bank
loan, all of the proceeds from which have in turn been loaned to the Company
for working capital, primarily to purchase Contracts. Further, Tom W. Palmer
and Eugene C. Albert are co-borrowers with the Company for two loans in the
aggregate principal amount of $110,000, all of the proceeds from which have
been used by the Company for working capital, primarily to purchase Contracts.
Eugene C. Albert has collateralized these two loans with real estate owned by
him. Tom W. Palmer, Eugene C. Albert and Ted W. Palmer together own all of the
Company's outstanding common stock. All of these personal obligations and
ownership provide personal incentives for these persons to remain with the
Company and focus on its successful management. See "Management" and
"Principal Shareholders."
CONFLICTS OF INTEREST ARISING FROM MANAGEMENT AND STAFF LOANS AND ACQUISITION
OF INVESTMENT CERTIFICATES.
- ------------------------------------------------------------------------------
Certain of the Company's management and shareholders have made unsecured
loans to the Company that are on a parity with the Investment Certificates in
the present offering. They have also guaranteed bank indebtedness and if
required to pay under the guarantees would succeed to the banks' rights with
respect to the indebtedness, including rights to collateral. In addition, the
management and staff, and the officers, directors and shareholders (and their
families and related entities or trusts) may, at their option, purchase
Investment Certificates directly from the Company on the same terms as other
unrelated investors. Conflicts of interest could arise between holders of
Investment Certificates who are management and staff, officers, directors and
shareholders (and their families and related entities, including trusts),
including those conflicts arising because of such persons,' entities' or
trusts' knowledge of the Company's affairs, and those holders of Investment
Certificates who have no such relationship with or knowledge of the Company, in
the event of a decline in the Company's prospects or any impending financial or
liquidity crisis that may threaten the Company because both groups would be
general creditors of the Company seeking payment from the same pool of Company
assets.
INFLUENCE OF LOCAL ECONOMY.
- ---------------------------
The availability and credit-worthiness of the underlying borrowers on the
Company's Contracts are influenced by the state of the economy for Lane County,
Oregon, the market area for the used automobile dealers that originate the
Company's Contracts. Should there be an economic downturn within this area,
whether as a result of weakness in the economy of the region or in the U.S.
economy as a whole, the ability of the Company to collect on its Contracts and
ultimately to pay on its Certificates could be adversely affected. The same
effect would apply to Loans made directly to the purchasers of Vehicles under
the Company's recently-obtained Oregon Consumer Finance License.
POSSIBLE BUSINESS DISRUPTION FROM COMPUTER APPLICATION FAILURE AT YEAR 2000.
- ----------------------------------------------------------------------------
Because the real-time clocks in many existing computer chips do not
properly recognize a year that begins with "20" rather than "19," many computer
applications based upon those chips could fail or create erroneous results at
and after midnight on December 31, 1999. Because many of these chips are
embedded in existing items of equipment and are non-programmable, components or
all of the equipment must be replaced to obviate these failures or erroneous
results. To the extent that faulty chips are not replaced in critical
components of equipment, heat, power, telephone and other services to the
Company, as well as the Company's own computers, could fail, causing disruption
to the Company's business. The Company has made inquiry of its computer,
communications, power and automobile suppliers (and, in particular, has
inquired of its automobile dealers whether any computer chip component in any
make of used automobile that serves as collateral for the Company's Contracts
contains a real-time clock that could be subject to failure) and has received
assurances that no failures will occur. However, in view of the subtlety of
the problem and the unfamiliarity with the scope of the problem by many in the
business community, there can be no assurance that the Company will not
encounter some form of computer or service failures at or after midnight on
December 31, 1999 which could result in disruption of the Company's business,
perhaps materially so, to the Company's detriment.
AVAILABILITY AND PRICE OF MOTOR FUEL.
- -------------------------------------
In recent years the United States has enjoyed ample supplies of motor
fuels at reasonable prices during all seasons of the year. In prior decades,
however, due to the collaboration of the world's major oil producing nations
through the Organization of Petroleum Export Countries ("OPEC"), supplies of
motor fuels and other petroleum products were artificially restricted, leading
to high oil and motor fuel prices and motor fuel shortages. During these
periods, the use and sale of automobiles, both new and used, was curtailed, and
the United States economy was adversely affected. Should the United States
again experience petroleum and motor fuel shortages and high prices, the demand
for automobiles could be adversely affected, to the detriment of the Company's
business and its ability to service its Certificates.
CHANGES IN LEVELS OF INTEREST RATES.
- ------------------------------------
Changes in the overall levels of interest rates in the United States may
have an adverse effect upon the Company. Should an increase in the level of
interest rates in the United States require the Company to pay higher interest
on its bank borrowings or Investment Certificates and the Company for
competitive or other reasons be unable to acquire Contracts at a
correspondingly lower cost, the Company's earnings and cash flows would be
adversely affected. Should a decrease in the level of interest rates in the
United States require the Company to pay more for its Contracts without a
corresponding decrease in the interest rates it would be required to pay on its
bank borrowings or Investment Certificates, the Company's earnings and cash
flows would also be adversely affected. There can be no assurance that the
Company would not be adversely affected as the result of changes in the overall
levels of interest rates in the United States.
COMPETITION.
- ------------
The Company's business is highly competitive. Most of the Company's
competitors are more established, larger and have greater resources than the
Company. In addition to companies that engage in the same business in the same
region as the Company (Lane County, Oregon), many banks, financial institutions
and finance companies in the Company's market area originate and purchase
Contracts and offer consumers debt investment instruments in competition with
the Company. Competition is generally based upon the price paid for Contracts
(which determines the rate of return) and the interest rate on the investment
instruments, as well as the credit-worthiness of the underlying borrowers. An
increase in competition in the financing of Contracts in the Company's market
area may decrease the return from such Contracts to the Company.
DEPENDENCE UPON THIRD PARTY SUPPLIERS OF CONTRACTS.
- ---------------------------------------------------
Although the Company has recently obtained a Consumer Finance License that
allows it to originate its own Loans on the sale of Vehicles, it primarily
relies upon used automobile dealers within Lane County, Oregon to originate
them and sell the Contracts to the Company as third party suppliers. These
dealers also sell Contracts to certain of the Company's competitors. Although
the Company believes that it will be able to continue to be able to purchase a
reasonable number of Contracts upon advantageous terms from dealers within Lane
County, there can be no assurance that it will be able to continue to do so.
Even though the Company has been issued a Consumer Finance License allowing it
to originate Loans directly from borrowers purchasing Vehicles, the Company
will in all probability remain dependent upon dealers for the major portion of
the Contracts in its portfolio of accounts receivable.
VIABILITY OF SUPPLIERS OF CONTRACTS.
- ------------------------------------
Although the Company investigates the viability of the used automobile
dealers that sell Contracts to the Company for credit-worthiness, there is a
risk that one or more of such suppliers of Contracts to the Company may not be
able to perform its guarantee or obligation to repurchase Contracts in the
event of defaults on the Contracts by the underlying borrowers. Any such
default by a Contract supplier could adversely affect the Company, perhaps
materially so. At July 31, 1998, $438,209, or approximately 10% of the dollar
value, of Contracts then outstanding were covered by full or partial guarantees
by the used automobile dealer suppliers of Contracts to the Company.
SUBJECTIVE NATURE OF CREDIT DECISIONS ON UNDERLYING BORROWERS UNDER THE
CONTRACTS.
- ------------------------------------------------------------------------
Although the Company considers a number of standardized factors in
determining the credit-worthiness of the underlying borrowers for the Contracts
it purchases, the Company's credit decisions in these purchases are to some
extent subjective in nature and to that extent dependent upon the skills of the
Company's General Manager, who makes the credit and Contract purchase
decisions. Although the Company believes that its General Manager is highly
skilled, because the Company only uses the services of its General Manager to
make Contract purchase decisions, should the General Manager repeat the same
type of subjective error in the evaluation of a number of separate credit
reports, any such an error could be cumulative and result in losses that could
be material in the aggregate.
BANKRUPTCIES AND DEFICIENCY JUDGMENTS AGAINST BORROWERS UNDER CONTRACTS AND
LOANS.
- ---------------------------------------------------------------------------
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws applicable to individuals, may limit or delay the ability of
the Company to repossess and resell Vehicles securing payment of the Contracts
or anticipated Loans, or to enforce a deficiency judgment against a borrower.
Oregon law prohibits the collection of a deficiency judgment following the
repossession or voluntary surrender of a Vehicle where the balance due on the
Contract or Loan is less than $1,250, but does not limit the Company's right to
collect the contract balance in situations where the Company does not obtain
possession of the Vehicle or where the Vehicle has been wrongfully damaged. In
addition, the Company may determine in its discretion that a deficiency
judgment is not an appropriate or economically viable remedy against a
particular borrower, or may settle at a significant discount any deficiency
judgment that it does obtain. In the event that a significant number of
deficiency judgments are not obtained, are not satisfied, are satisfied at a
discount or are discharged in whole or in part in bankruptcy proceedings, the
Vehicles securing the Contracts and Loans would not serve their intended
purpose of providing collateral with an underlying realizable value, thereby
reducing the collectability of the Contracts or Loans, which may adversely
affect the ability of the Company to pay the Investment Certificates.
PRIORITY LIENS ON COLLATERAL FOR THE COMPANY'S CONTRACTS AND LOANS.
- -------------------------------------------------------------------
At July 31, 1998, the Company had over 820 open accounts for its Contract
receivables and expects to have accounts receivable for its Loans under its
recently obtained Consumer Finance License from the State of Oregon. Although
the Company may obtain a security interest in Vehicles for the repayment of
these accounts receivable, Oregon state law provides for the priority over the
Company's security interest of statutory liens for certain repairs made to or
unpaid taxes assessed against a Vehicle. In addition, certain state and
federal laws permit the confiscation of a Vehicle used in unlawful activities
(such as drugs or prostitution) that may serve as collateral for the Company's
Contracts and Loans. Those laws may result in the loss of the Company's
priority security interests in confiscated property that serves as collateral
for Contracts and, as the Company makes Loans directly, for Loans. The
imposition of a significant number of liens for repairs or taxes, or a
substantial confiscation of Vehicles, during the term of any Contracts or
Loans, could adversely affect the Company's ability to pay interest or
principal on the Investment Certificates.
GOVERNMENTAL REGULATION.
- ------------------------
The Company is subject to significant governmental regulation at both the
federal and state levels. Numerous federal and state consumer laws and related
regulations impose substantial requirements upon lenders and services involved
in consumer finance, and upon the origination and collection of consumer loans,
including the Company's Loans, and retail installment contracts, including the
Company's Contracts. Some laws and regulations with which the Company must
comply include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, the Federal
Consumer Credit Protection Act, and other similar federal and state laws.
Oregon law also contains express statutory provisions regulating the form,
content, terms and enforcement of retail installment contracts involving motor
vehicles. The so-called "Holder-in-Due Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Oregon Uniform Commercial Code and other provisions of Oregon law, have
the effect of subjecting a seller and certain related lenders and their
assignees in a consumer credit transaction, and any assignee of the seller, to
all claims and defenses which the debtor in the transaction could assert
against the seller of the goods. Contracts acquired by the Company are subject
to the FTC Rule or its Oregon equivalent. In addition, in order to conduct its
consumer loan business, the Company must continue to hold a Consumer Finance
License from the state of Oregon. The Company believes it currently holds all
material licenses necessary to carry on its business as presently conducted in
the state of Oregon. None of the Company's management are attorneys, and the
Company's relatively small size does not allow allocation of a significant
amount of resources for legal compliance. There thus can be no assurance that
the Company will be able to maintain all its licenses necessary to conduct its
business, or will be able to comply with all applicable consumer finance laws
now in existence or as may be hereafter amended or adopted. Any failure to
maintain these licenses or to comply with these laws could negatively impact
the Company's revenues and adversely affect the Company's operations, possibly
adversely affecting its ability to make payments on the Investment
Certificates. However, failure of the Company to maintain its licenses should
not affect the quality of its then existing portfolio of Contracts receivable.
UNCERTAINTY OF INTERNAL BUDGETS AND FORWARD-LOOKING INFORMATION.
- ----------------------------------------------------------------
Although the Company has prepared its internal budgets and its other
forward-looking information, some of which is reflected in this Prospectus, in
accordance with the best of management's knowledge and belief, there will be
differences between the projected and actual results because events and
circumstances frequently do not occur as expected, and those differences may be
material and adverse. The Company's forward-looking information is based on a
number of estimates and assumptions that, though considered reasonable by the
Company's management, are inherently subject to significant economic and
competitive uncertainties and contingencies beyond the control of the Company
or its management and upon assumptions with respect to future business
decisions which are subject to change. Accordingly, there can be no assurance
that the anticipated results will be realized, and actual results may vary from
those projected. If actual results are lower than those anticipated, or if the
assumptions used in making the projections are not realized, the Company's
ability to achieve reasonable rates of revenues and earnings and to make timely
payment of its Investment Certificates may be adversely affected.
ARBITRARY SIZE OF THE OFFERING.
- -------------------------------
The amount of Investment Certificates offered by the Company in this
offering ($10,000,000) bears no relationship to the Company's asset value, book
value, net worth, or any other established criterion of value, or to the
earnings potential of the Company, and for this reason may be deemed inherently
arbitrary in nature. This size of the offering was established by the
Company's management based upon management's subjective estimates of the
Company's future purchase of Contracts and the origination of its own Loans.
NO VOTING RIGHTS OR OTHER MEANS TO DIRECTLY AFFECT MANAGEMENT.
- --------------------------------------------------------------
You as a holder of the Investment Certificates have no rights to elect
directors or otherwise directly influence the Company's management policies or
practices. Accordingly, you would have no rights to influence the Company's
operations should you disagree with the manner in which the Company's
operations are being conducted.
<PAGE>
USE OF PROCEEDS
---------------
The net proceeds from the sale of the Investment Certificates in this
offering, after deducting offering expenses estimated to be $100,000, is
expected to be $9,900,000 if all of the Investment Certificates are sold.
Funds will be available to the Company as received.
All of the net proceeds from this offering will be used as working
capital, primarily to finance the purchase of Contracts in the ordinary course
of the Company's business.
Pending use of the proceeds in the above manner, they will be used to
reduce outstanding indebtedness under the Company's bank line-of-credit or
invested in U. S. Government obligations or other near-cash investments.
CAPITALIZATION
--------------
The following table sets forth the capitalization of the Company as of
July 31, 1998, and as adjusted to reflect the issuance of the maximum number of
Investment Certificates in this offering.
<TABLE>
<CAPTION>
Actual at
July 31, 1998 As Adjusted
(Before this (After this
Offering) Offering)
--------------- --------------
<S> <C> <C>
Long-term debt, exclusive
of current portion (1) $ 1,467,476 $ 1,467,476
Investment Certificates $ - $ 10,000,000
Common Stock, no par value,
1,000 shares authorized,
300 shares outstanding: $ 150,000 $ 150,000
- ---------------------------
</TABLE>
(1) Excludes $2,687,431 of secured bank indebtedness pursuant to a Loan
Agreement dated April 6, 1998 with Pacific Continental Bank that
establishes a $3,000,000 line-of-credit secured by the Company's assets,
including its Contract and Loan portfolio. Under the terms of the Loan
Agreement, the Company may borrow an amount equal to 70% of eligible
Contract and Loan accounts and is obligated, among other things, to
maintain: a tangible net worth of not less than $300,000 as of December
31, 1998, life insurance on each of the lives of Tom W. Palmer and Eugene
C. Albert of $250,000, personal guarantees of the loan of $3,000,000 by
Tom W. Palmer and Eugene C. Albert and of $1,000,000 by Ted W. Palmer, and
compliance with the terms and conditions of all other agreements to which
it is a party ("cross-default" provision).
<TABLE>
STATEMENT OF INCOME
For the 7 Months Ended July 31, 1998 and
the Period from Inception (October 1, 1997) to December 31, 1997
----------------------------------------------------------------
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
REVENUES
Interest on contracts $ 468,116 $ 5,901
Other income 3,140 246
------------ ------------
Total Revenues 471,256 6,147
------------ ------------
EXPENSES
Interest 154,671 3,815
Salaries 79,017 30,408
Provision for credit losses 231,129 -
Other operating expenses 72,011 15,082
------------ ------------
Total Expenses 536,828 49,305
------------ ------------
NET INCOME (LOSS) $ (65,572) $ (43,158)
============ ============
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
-------------------------------------------------------------
The Company commenced operations in October, 1997 and through July 31,
1998 has generated $477,403 of revenues and $108,730 of net operating losses.
At July 31, 1998 the Company had approximately $55,003 in cash, $4,233,810 in
net Contract receivables (after deducting an allowance for credit losses of
$191,000 and adding capitalized loan origination costs of $35,148 and interest
receivable on Contracts of $64,500), approximately $4,192,361 of indebtedness
of all types and a shareholders' equity of approximately $291,270.
The Company has no relevant operating history upon which an evaluation of
its prospects can be made. In particular, the Company has not yet had
sufficient operating experience to confirm the adequacy of the provisions for
credit losses on its Contracts reflected on the Company's financial statements.
The Company's business is not seasonal in nature.
UNCERTAINTY OF INTERNAL BUDGETS AND FORWARD-LOOKING INFORMATION.
- ----------------------------------------------------------------
Although the Company has prepared its internal budgets and its other
forward-looking information, some of which is reflected in this Prospectus, in
accordance with the best of management's knowledge and belief, there will be
differences between the projected and actual results because events and
circumstances frequently do not occur as expected, and those differences may be
material and adverse. The Company's forward-looking information is based on a
number of estimates and assumptions that, though considered reasonable by the
Company's management, are inherently subject to significant economic and
competitive uncertainties and contingencies beyond the control of the Company
or its management and upon assumptions with respect to future business
decisions which are subject to change. Accordingly, there can be no assurance
that the anticipated results will be realized, and actual results may vary from
those projected. If actual results are lower than those anticipated, or if the
assumptions used in making the projections are not realized, the Company's
ability to achieve reasonable rates of revenues and earnings and to make timely
payment of its Investment Certificates may be adversely affected.
RESULTS OF OPERATIONS FOR SEVEN MONTHS ENDED JULY 31, 1998.
- -----------------------------------------------------------
The Company experienced rapid growth during the first seven months of
1998. In particular, as the result of the purchase of Contracts, finance
receivables increased by 789% from $476,120 at December 31, 1997 to $4,233,810
at July 31, 1998. Interest on finance receivables contributed $468,116, or
99.3%, to the total revenues of $471,256 for the seven months ending July 31,
1998. Through use of its recently obtained Consumer Finance License, the
Company plans to increase revenues in the future with little or no additional
expense through the generation of loan and other fees by originating Loans
directly with borrowers purchasing Vehicles in addition to purchasing Contracts
from dealers.
Net chargeoffs for the seven-months period were $40,129 or 1.7% of average
finance receivables outstanding during the period. However, a loss provision
of $231,129, representing 4.7% of new finance receivables, was established and
charged to operations for the period. This resulted in an allowance for credit
losses of $191,000, or 4.4% of finance receivables outstanding at the end of
the period. The Company expects that additional loss provisions in excess of
net chargeoffs will be charged to operations in future periods, with the result
that over time the allowance for credit losses will increase both in absolute
terms and as a percentage of finance receivables outstanding at the end of
future periods.
Reflecting in part the $231,129 provision for credit losses, which
constituted 43.1% of the $536,828 of total expenses for the seven-months
period, the Company incurred a net loss for the period of $65,572. Interest
expense of $154,671 constituted 28.8% of these total expenses, and salaries of
$79,017 constituted 14.7%. The Company plans to reduce the impact of interest
expense in future periods by borrowing through the sale of Investment
Certificates in this offering at interest rates that are lower than those it is
currently paying. Even though the Company incurred a net loss for the period
of $65,572, net cash flows for the period were $26,699.
LIQUIDITY AND CAPITAL RESOURCES.
- --------------------------------
The finance nature of the Company's business results in its being capital
intensive. To date, the Company has relied primarily on secured bank financing
and shareholder loans to fund its purchase of Contracts.
From inception to December 31, 1997, the Company borrowed an aggregate of
$386,000 from its management, and during the ensuing seven months ended July
31, 1998, it borrowed an additional $814,000 from the Company's management and
$472,500 from friends and family of management in private transactions. Most
of these funds were borrowed pursuant to 12% promissory notes, most of which
are payable upon demand. Certain of these borrowings have been repaid and an
aggregate of $1,467,476 remained outstanding at July 31, 1998.
On April 6, 1998 the Company entered a Loan Agreement with Pacific
Continental Bank that establishes a $3,000,000 line-of-credit secured by the
Company's assets, including its Contract and Loan portfolio. Under the terms
of the Loan Agreement, the Company may borrow an amount equal to 70% of
eligible Contract and Loan accounts and is obligated, among other things, to
maintain: a tangible net worth of not less than $300,000, life insurance on
each of the lives of Tom W. Palmer and Eugene C. Albert of $250,000, personal
guarantees of the loan of $3,000,000 by Tom W. Palmer and Eugene C. Albert and
of $1,000,000 by Ted W. Palmer, and compliance with the terms and conditions of
all other agreements to which it is a party ("cross-default" provision). At
July 31, 1998 the Company had outstanding secured bank indebtedness of
$2,687,431 pursuant to this credit facility.
As yet, the Company has not experienced difficulties in obtaining
financing. However, it has begun to reach the limits of its current bank line-
of-credit and expects to rely increasingly upon sales of the Investment
Certificates in the present offering, which have lower interest rates than
interest rates that the Company is currently paying, for financing the purchase
of Contracts and the funding of Loans in the future. Because the proceeds from
the sale of Investment Certificates will be used to purchase Contracts and
originate Loans that serve as collateral for bank borrowings, and because the
Investment Certificates are subordinated to bank borrowings, the sale of
Investment Certificates is expected to increase the ability of the Company to
borrow from commercial banks. If the Company is able to successfully sell
Investment Certificates at interest rates that are lower than the rates charged
by commercial banks, as the Company's competitors have been able to do over the
years, the Company plans in the future to rely upon the sale of Investment
Certificates over bank borrowings to fund its portfolio of Contracts and Loans.
YEAR 2000 ISSUES.
- -----------------
The Company has made inquiry of its computer, communications, power and
automobile suppliers (and, in particular, has inquired of its dealers whether
any computer chip component in any make of used automobile that serves as
collateral for the Company's Contracts contains a real-time clock that could be
subject to failure) and has received assurances that no failures will occur.
Further, the Company's automobile dealer suppliers have indicated that they do
not expect any disruption in the availability and sale of used vehicles as the
result directly or indirectly of Year 2000 systems failures. However, in view
of the subtlety of the problem and the unfamiliarity with the scope of the
problem by many in the business community, the Company expects to develop
contingency plans in the event it should encounter some form of computer or
service failures at or after midnight on December 31, 1999 as the result of
Year 2000 problems. The Company is continuing to explore the scope and nature
of the effects upon its business that may result from Year 2000 computer
failures and errors and has deferred the establishment of contingency plans
pending the development of further information concerning the impact of the
Year 2000 issue upon the Company and the alternatives available to it.
However, the Company does not expect that the costs associated with these
contingency plans will be material.
<PAGE>
BUSINESS
--------
Credit Concepts, Inc. is in the business of purchasing retail installment
Contracts that have been originated by regional used automobile dealers in
connection with the financing of used automobiles. Upon the purchase of a
Contract, the Company obtains the right to receive all remaining payments under
the Contract and a security interest in the Vehicle financed. The Company
seeks to collect the principal and interest due on the Contracts that it
purchases. The Company does not acquire Contracts in bulk but acquires them
individually, usually from originating used automobile dealers, after a credit
review and analysis of the specific borrower. Payments under the Contracts
extend for up to 66 months, and it is the strategy of the Company to match
approximately the maturities of the Investment Certificates in this offering
with the payment schedules under the Contracts it purchases in order to reduce
the financial risks associated with unforeseen declines in interest rates. The
Company's operations consist primarily of evaluating which Contracts to
purchase, negotiating the terms of the purchase, and arranging for the
Company's financing of the purchase.
The Company has recently received from the Oregon Department of Consumer
and Business Services a Consumer Finance License, which allows the Company to
make Loans directly to the purchasers of used automobiles rather than having
the Company purchase the Loans from the dealers after they have been made.
However, the Company has not yet originated any significant number of Loans and
expects to continue to develop its portfolio of accounts receivable primarily
from Contracts purchased from dealers.
ECONOMY OF LANE COUNTY, OREGON.
- -------------------------------
The availability and credit-worthiness of the underlying borrowers on the
Company's Contracts are influenced by the state of the economy for Lane County,
Oregon (which includes the cities of Eugene and Springfield), the market area
for the used automobile dealers that originate the Company's Contracts. The
timber and forest products industry and the University of Oregon have
historically been significant influences on the economy of Lane County, Oregon,
although in recent years an impact has resulted from the location of various
technology companies in the region. In recent years California has been an
important source of in-migration. In view of the sprawling lay-out of the
cities of Eugene and Springfield and surrounding neighborhoods, and of the 134
average number of days (37%) with measurable precipitation annually, most
workers in the Lane County area regularly commute to work by automobile, and,
indeed, for many jobs, automobile transportation is the only practical means of
commuting to work. For this reason, the Company believes that access to an
automobile is essential to job retention for a significant portion of the Lane
County work force and that this influences the payment priority for many
workers in the region with outstanding consumer credit.
The following table shows population growth for Lane County since 1960:
<TABLE>
Population of Lane County, Oregon 1960 - 1990
---------------------------------------------
<CAPTION>
10-Year
Year Population Change
---- ---------- -------
<S> <C> <C> <C>
1960 162,890
1970 215,401 +32.2%
1980 275,226 +27.8%
1990 282,912 +2.8%
</TABLE>
The number of vehicles registered in Lane County has increased each year
over the past ten years. The following table shows the number of vehicle
licenses issued for vehicles in Lane County for each of the past ten years:
<TABLE>
Number of Vehicle Licenses Issued
for Vehicles in Lane County
-----------------------------------------
<CAPTION>
Year Number of Vehicle Licenses
---- --------------------------
<S> <C> <C>
1987 221,050
1988 223,840
1989 235,771
1990 237,045
1991 241,959
1992 243,817
1993 249,398
1994 254,689
1995 255,790
1996 263,066
1997 271,285
</TABLE>
MARKETING.
- ----------
The Company does not originate a significant number of its own Loans on
the sale of Vehicles but relies primarily upon used automobile dealers in the
Lane County, Oregon area to originate them and sell the Contracts to the
Company. In connection with its ongoing purchase of Contracts, the Company has
entered into master dealer agreements with fourteen automobile dealers that
sell used automobiles to borrowers in Lane County. These dealers also sell
Contracts to certain of the Company's competitors. The Company has been able
to purchase a reasonable number of Contracts upon advantageous terms from
dealers that sell to borrowers within Lane County and expects to be able to
continue to do so for the foreseeable future.
The Company has recently received from the Oregon Department of Consumer
and Business Services a Consumer Finance License, which allows the Company to
make Loans directly to the purchasers of used automobiles rather than having
the Company purchase the Loans from the dealers after they have been made.
Although the Company has recently been issued a Consumer Finance License to
originate Loans directly from borrowers purchasing Vehicles, the Company
expects to continue to purchase the major portion of the Contracts in its
portfolio from used automobile dealers in Lane County.
Under the master dealer agreements, a Contract may be purchased "with
recourse," "without recourse" or with "limited recourse." Purchases "with
recourse" and with "partial recourse" are backed by full and partial
guarantees, respectively, of the used automobile dealers selling the Contracts.
Before entering into a master dealer agreement with a used automobile dealer,
the Company investigates the viability of the dealer for credit-worthiness to
assess the ability of the dealer to perform its guarantee or obligation to
repurchase Contracts in the event of defaults on the Contracts by the
underlying borrowers. Approximately 10% of the dollar value of Contracts
outstanding on July 31, 1998 were covered by full or partial guarantees by the
used automobile dealers supplying Contracts to the Company.
VEHICLE CONTRACTS.
- ------------------
Almost all of the Company's business consists of the purchase and
collection of Vehicle Contracts from used automobile dealers. The form of the
Contract is a standard one widely used within the automobile industry. The
price that the Company pays for a Contract anticipates that total payments
under the Contract will exceed the net cost of the Vehicles, plus anticipated
financing and other costs, and a return to the Company. Under the terms of the
Contract, the borrower is obligated to license, maintain, insure and pay taxes
on the Vehicle for the term of the Contract. Also, under the terms of the
Contract, any claims that a borrower may have against a dealer with respect to
the Vehicle being financed may not be offset against payments under the
Contract and thus be used to justify any failure to make payments on the
Contract.
The Company's General Manager personally reviews the credit record of the
underlying borrower for each Contract that the Company purchases and, based
upon that review, makes the decision whether or not to purchase the Contract.
The Company purchases Contracts individually after such a credit review and as
a matter of policy does not purchase Contracts in bulk. The Company considers
a number of factors in determining the credit-worthiness of the underlying
borrowers for the Contracts it purchases. Recently, for ease of servicing the
Contracts, the Company has decided to limit its Contract purchases to those
with borrowers that reside within seventy miles of the Company's offices. In
this regard, approximately half of the borrowers under the Company's Contracts
make their Contract payments by personal visit to the Company's offices in
Eugene, Oregon. Further, the Company's employees are within a relatively short
drive to most of the dealers from which it purchases Contracts and to the
residences of the underlying borrowers, which allows the employees to inspect
Vehicles before a Contract is purchased and assists in repossession upon a
default, should either be necessary or desirable. The close working
relationship which the Company maintains with its automobile dealers allows the
Company's General Manager to be apprised of surpluses and shortages of
particular makes and models of used automobiles within Lane County, which
provides insight at the time of Contract purchase into the extent of
realization on the Vehicle collateral in the event of default. The Company
does not buy Contracts on Vehicles owned by students who are not both employed
and permanent residents of Lane County.
The Company purchases Contracts on a variety of Vehicles. Certain
information for Contract receivables as of July 31, 1998 is shown below:
<TABLE>
<CAPTION>
Certain Information for Contract Receivables as of July 31, 1998
----------------------------------------------------------------
<S> <C> <C>
Number of Contracts 842
Cost of Contracts $ 4,867,499
Contract Receivables Outstanding $ 4,325,162
Average Annual Percentage Rate (APR) of Interest 30.8 %
Average Contract Balance $ 5,212
Average Term of Contract 41 months
Average Age of Contract 4.5 months
Average Payment per Month $ 230
</TABLE>
The Company purchases Contracts for a large variety of borrowers and
Vehicles. The largest, smallest and average Contracts purchased during the
seven months ended July 31, 1998 were $20,167, $761 and $5,781, respectively.
The longest term was 66 months and the shortest was 6 months.
CREDIT LOSS EXPERIENCE.
- -----------------------
The Company commenced business in October, 1997 and has not yet had
sufficient operating experience to confirm the adequacy of the provisions for
credit losses on its Contracts reflected on the Company's financial statements.
At July 31, 1998, the total balances owing on Contracts receivable past
due from 60 to 89 days was $6,599, or 0.15% of total Contracts receivable, and
on Contracts receivable past due 90 days and over was $2,075, or 0.05% of total
Contracts receivable.
A Contract receivable is considered past due if any portion of any
installment is or remains 30 days delinquent. The Company's policy is not to
extend or renew past due accounts. The Company stops accruing revenue on a
past due receivable when (i) the account is in litigation, (ii) the Vehicle is
repossessed, or (iii) at such earlier time as, in the judgment of management,
full collection of the Contract becomes doubtful.
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws applicable to individuals, may limit or delay the ability of
the Company to repossess and resell Vehicles under the Contracts or anticipated
Loans, or to enforce a deficiency judgment against a borrower under a Contract.
Oregon law prohibits the collection of a deficiency judgment following the
repossession or voluntary surrender of a Vehicle where the balance due on the
Contract or Loan is less than $1,250, but does not limit the Company's right to
collect the contract balance in situations where the Company does not obtain
possession of the Vehicle or where the Vehicle has been wrongfully damaged. In
addition, the Company may determine in its discretion that a deficiency
judgment is not an appropriate or economically viable remedy against a
particular borrower, or may settle at a significant discount any deficiency
judgment that it does obtain.
Although the Company may obtain a security interest in the Vehicles for
the payment of the Contracts the Company acquires, and, when properly licensed
will include the Loans it originates, Oregon state law provides for the
priority over the Company's security interest of statutory liens for certain
repairs made to or unpaid taxes assessed against a Vehicle. In addition,
certain state and federal laws permit the confiscation of a Vehicle used in
unlawful activities (drugs or prostitution, for example) that may serve as
collateral for Contracts and Loans. Those laws may result in the loss of the
Company's priority security interests in confiscated property that serves as
collateral for Contracts or for Loans. To date, none of the Vehicles serving
as collateral for the Company's Contracts has been confiscated.
The following table shows the Company's realization experience on those
past due Contract receivables for which realization efforts have been completed
during the seven months ended July 31, 1998.
<TABLE>
Past Due Contract Receivables for Which
Realization Efforts Have Been Completed
------------------------------------------------------------
<CAPTION>
Number of Total Total Average
Past Due Amount Amount Percentage
Contracts Past Due Realized Realized
--------- -------- -------- ----------
<S> <C> <C> <C> <C>
17 $82,794 $42,665 51.5%
</TABLE>
The credit loss experience of the Company for the seven months ended
July 31, 1998 is as follows:
<TABLE>
Credit Loss Experience
-----------------------------------------------------------------------
<CAPTION>
Reserve at Additions to Reserve
beginning of reserve charged Chargeoffs at end
period to operations net of recoveries of period
------------ --------------- ----------------- -----------
<S> <C> <C> <C> <C>
$ - $231,129 $40,129 $191,000
(4.7%) (1) (1.7% (2) (4.4%) (3)
- ----------------------------
(1) Percentage of new receivables for the period.
(2) Percentage of average receivables outstanding.
(3) Percentage of receivables outstanding at end of period.
</TABLE>
FINANCING OF CONTRACTS.
- -----------------------
The Company is continuously engaged in financing in order to be able to
purchase Contracts from automobile dealers as Vehicles are sold to qualified
borrowers. To date the Company has relied primarily upon bank borrowings and
the purchase of debt and equity by its founders and others for this purpose.
However, the Company has begun to reach the limits of its presently available
bank credit and, like certain of its competitors, is now seeking to finance its
Contracts through the sale of unsecured Investment Certificates, which is the
purpose of this offering. The Company intends to finance the purchase of its
Contracts in this manner for the indefinite future. See "Use of Proceeds."
The Company has entered into loan agreements and issued promissory notes
in connection with the Company's bank lines-of-credit. Those agreements and
promissory notes require the Company to comply with and maintain various
financial and other covenants in order to avoid default. Those covenants
include the necessity to maintain a minimum net worth of $300,000 by December
31, 1998, as well as for the Company to comply with payment and performance
obligations of the Company's bank lines-of-credit and other contractual
obligations. The Company's bank indebtedness is secured by all of the
Company's assets, including its Contracts receivable portfolio. The Investment
Certificates are unsecured, but the proceeds from their sale will be used to
purchase Contracts that serve as collateral for the bank indebtedness. For
this reason, the unsecured debt represented by the Certificates will be treated
as equity for purposes of the ratios and capital minimums that must be
maintained under the bank line-of-credit agreement. As a result, sale of the
Certificates in this offering and the purchase of Certificates with the
proceeds will increase the ability of the Company to borrow under the terms of
its bank line-of-credit and is expected to allow the Company to increase the
size of its bank line of credit should it desire to do so.
The Company plans for its business to grow significantly in ensuing years
through the purchase of Contracts and the origination of Loans. Virtually all
of this increase in business is expected to be financed by a corresponding
increase in Company indebtedness of all types, including bank indebtedness and
the sale and issuance of Investment Certificates.
COMPETITION.
- ------------
The Company's business is highly competitive. Most of the Company's
competitors are more established, larger and have greater resources than the
Company. In addition to companies that engage in the same business in the same
region as the Company (Lane County, Oregon), many banks, financial institutions
and finance companies in the Company's market area originate and purchase
Contracts and offer consumers debt investment instruments in competition with
the Company. Competition is generally based upon the price paid for Contracts
(which determines the rate of return) and the interest rate on the investment
instruments, as well as the credit-worthiness of the underlying borrowers. An
increase in competition in the financing of Contracts in the Company's market
area may decrease the return from such Contracts to the Company.
GOVERNMENTAL REGULATION.
- ------------------------
The Company is subject to significant governmental regulation at both the
federal and state levels. Numerous federal and state consumer laws and related
regulations impose substantial requirements upon lenders and services involved
in consumer finance, and upon the origination and collection of consumer loans,
including the Company's Loans, and retail installment contracts, including the
Company's Contracts. Some laws and regulations with which the Company must
comply include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, the Federal
Consumer Credit Protection Act, the Oregon Unlawful Debt Collection Practices
Act and other similar federal and state laws. Oregon law also contains express
statutory provisions regulating the form, content, terms and enforcement of
retail installment contracts involving motor vehicles.
The so-called "Holder-in-Due Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Oregon Uniform Commercial Code and other provisions of Oregon law, have the
effect of subjecting a seller and certain related lenders and their assignees
in a consumer credit transaction, and any assignee of the seller, to all claims
and defenses which the debtor in the transaction could assert against the
seller of the goods. Contracts acquired by the Company are subject to the FTC
Rule or its Oregon equivalent. In addition, in order to conduct its consumer
loan business, the Company must hold a Consumer Finance License from the state
of Oregon.
The Company believes it currently holds all material licenses necessary to
carry on its business as presently conducted in the state of Oregon. There can
be no assurance that the Company will be able to maintain all its licenses
necessary to conduct its business, or will be able to comply with all
applicable consumer finance laws now in existence or as may be hereafter
amended or adopted. Any failure of the Company to maintain its licenses should
not affect the quality of its then existing portfolio of Contracts.
EMPLOYEES.
- ----------
The Company has a total of six full-time employees, including the
Company's management, of which one is engaged in credit analysis and Contract
purchasing, two are engaged in Contract collection (including Vehicle
repossession), and four are administrative and clerical. The Company also uses
the services of an independent contractor in repossession efforts and another
for bookkeeping services.
The Company provides partial medical benefits to its employees. The
Company believes that its relations with its employees are satisfactory.
LEGAL PROCEEDINGS.
- ------------------
Except for routine litigation by the Company to obtain deficiency
judgments upon defaulted Contracts in the ordinary course of the Company's
business, neither the Company nor any of its property is a party to any pending
legal proceeding.
PROPERTY
---------
The Company maintains an approximately 1,300 square foot leased office at
2149 Centennial Plaza, Suite 2, Eugene, Oregon pursuant to a three-year lease
that expires on October 31, 2000. The annual rental rate is currently $14,934,
which will increase to $15,840 in the third year. Payments under the lease are
guaranteed by two of the Company's founders. See "Management - Certain
Transactions." The Company owns certain computer equipment and office
furniture at its office and is expected to acquire similar equipment needed as
operations expand. The Company expects that its offices will be adequate for
the Company's purposes for the foreseeable future.
MANAGEMENT
----------
The Officers and Directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C> <C>
Tom W. Palmer President and Director
Eugene C. Albert Vice-President, Secretary and Director
Ted W. Palmer Director
</TABLE>
Tom W. Palmer is the son of Ted W. Palmer.
The career experience of the Company's key personnel is as follows:
TOM W. PALMER, 42, President and Director. Tom W. Palmer has been
the Company's President and Chief Executive Officer since it was founded in
August, 1997. Mr. Palmer's duties with the Company include developing and
maintaining banking and investor relations, managing the purchasing of
Contracts for the Company's loan portfolio, financial management, business
development and the development and implementation of the Company's Investment
Certificate financing program described in this Prospectus. For in excess of
five years prior to that time he was president and a director of RDS Inc.
d.b.a. Mobile Advantage of Eugene, Oregon, which designs and manufactures
custom food delivery vehicles, primarily for retail food outlets. Mr. Palmer
also served as secretary and director of Woodcrafters Cabinets Inc., which
ceased doing business in 1997.
EUGENE C. ALBERT, 41, Vice-President, Secretary and Director. Eugene C.
Albert has acted as the Company's Vice President, Secretary and Chief Financial
Officer since its inception in August, 1997. His duties include coordination
of capital funding of the Company, evaluating and managing credit losses, and
the supervision of financing and credit operations. For in excess of five
years prior to his employment by the Company, Mr. Albert served as secretary-
treasurer and a director of Mansell Development. Inc., a real estate
development company in Eugene, Oregon, for which he was responsible for
arranging development and long-term financing.
TED W. PALMER, 66, Director. Ted W. Palmer was a founder, major
shareholder, president and chairman of Kalama Chemical, Inc., now a wholly-
owned subsidiary of B.F. Goodrich Company. Mr. Palmer sold his interest in
Kalama Chemical, Inc. in 1986 and since his retirement as Chairman and Chief
Executive Officer of Kalama Chemical, Inc. in 1989 has been primarily engaged
in the management of his personal investment portfolio. Since 1996, Mr. Palmer
has been a director of Pend Oreille Bank, a state-chartered commercial bank in
Newport, Washington.
KIMBERLY M. COLEMAN, 40, General Manager. Kimberly M. Coleman has served
as the General Manager of the Company since its inception in August, 1997. Ms.
Coleman's duties include reviewing borrower credit records and making the
purchase decision for each Contract acquired by the Company for its Contract
loan portfolio, as well as initiating initial follow-up communications with
delinquent borrowers. For one year prior to that she was business manager for
Kendall Honda, an automobile dealer in Eugene, Oregon, for one year prior to
that she acted as the assistant manager of WFS Financial Services, a consumer
finance company in Salem, Oregon, and for two years prior to that she served as
operations manager of Northwest Auto Credit, a consumer finance company in
Portland, Oregon. For five years prior to that, Ms. Coleman served as business
and collection manager for Ron Tonkin Auto Acceptance, Portland, Oregon, a high-
risk automobile finance company lending through the Ron Tonkin automobile
dealerships.
COMPENSATION.
- -------------
The cash and other direct remuneration of members of management of the
Company for the seven months ended July 31, 1998, is as follows:
<TABLE>
Direct Compensation to Management
For Seven Months Ended July 31, 1998
------------------------------------
<CAPTION>
Seven Months Annualized
--------------------- ----------------------
Name Position Salary Other Salary Other
- -------------- -------------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Tom W. Palmer President, CEO $24,500 $570 $42,000 $978
(Officers, Directors and
Management as a Group)(1) $70,000 $8,640 (2) $120,000 $16,956 (2)
- --------------------
(1) Consists of Tom W. Palmer, Eugene C. Albert, Kimberly M. Coleman and Ted
W. Palmer.
(2) Reflects payment of $7,500 of Ms. Coleman's $15,000 bonus during the first
seven months of 1998 and the remaining $7,500 during the last five months
of 1998.
</TABLE>
The Company has entered into a five-year employment agreement expiring
September 15, 2002 with Kimberly M. Coleman pursuant to which Ms. Coleman will
act as the Company's General Manager. Under the terms of the agreement, Ms.
Coleman will receive an annual salary commencing at $48,000 and increasing to
$60,000, plus annual bonuses of 0.85% of Contract receivables booked, with
limits of $15,000 the first year and $20,000 the second year, and thereafter of
6% of the Company's net profits, without limitation. The agreement precludes
Ms. Coleman from competing with the Company for two years following
termination, except for termination by the Company without cause.
CERTAIN TRANSACTIONS.
- ---------------------
In connection with the founding of the Company in August, 1997, Tom W.
Palmer, Eugene C. Albert and Ted W. Palmer were issued equal amounts of the
equity interests of Credit Concepts, L.L.C., and on January 1, 1998 the assets
of that limited liability company were transferred to Credit Concepts, Inc. On
January 20, 1998, each of those persons purchased 100 shares of capital stock
of that corporation for $50,000. Each of such persons paid $10,000 of such
amount in cash and $40,000 of such amount by giving a $40,000 promissory note
to the Company. See "Principal Shareholders."
By 12% unsecured demand loans of $5,000 in October, 1997, $30,000 in
November, 1997, $30,000 in February, 1998, and $13,000 in March, 1998, Eugene
C. Albert, the Vice-President, Secretary and a Director of the Company, lent an
aggregate of $78,000 to the Company. By 12% unsecured demand loans of $40,000
in January, 1998, $10,000 in March, 1998, and $17,500 in April, 1998, Kimberly
M. Coleman, the General Manager of the Company, and her husband lent an
aggregate of $67,500 to the Company. By 12% unsecured demand loans of $116,000
in November, 1997, $22,000 in March, 1998, $15,000 in April, 1998, and $20,000
in June, 1998, Tom W. Palmer, the President and a Director of the Company, and
his wife lent an aggregate of $173,000 to the Company. By 12% unsecured demand
loan of $50,000 in October, 1997, $100,000 in November, 1997, $150,000 in
December, 1997, $100,000 in March, 1998, $100,000 in May, 1998, and $100,000 in
June, 1998, Ted W. Palmer, a Director of the Company, lent an aggregate of
$600,000 to the Company.
In addition, Tom W. Palmer and Eugene C. Albert have each guaranteed an
aggregate of $3,000,000 under the Company's secured bank line-of-credit, and
Ted W. Palmer has guaranteed an aggregate of $1,000,000 under that line-of-
credit. These unsecured loans are on a parity with the Investment Certificates
in the present offering. If Tom W. Palmer, Ted W. Palmer and Eugene C. Albert
should be required to pay under the guarantees bank indebtedness, they would
succeed to the banks' secured rights with respect to the indebtedness,
including rights to collateral.
In July, 1998, Tom W. Palmer, Eugene C. Albert and Ted W. Palmer became
accommodation borrowers for a $450,000 unsecured loan by South Umpqua State
Bank. All of the proceeds from this loan have in turn been loaned to the
Company for working capital, primarily to purchase Contracts. This $450,000
loan to the Company by Tom W. Palmer, Eugene C. Albert and Ted W. Palmer
accrues interest at the rate of 12% per annum and is due in full on August 1,
2000.
In April, 1998, Tom W. Palmer, Eugene C. Albert and the Company borrowed
$40,000 from Amvesco, Inc. dba Western Pioneer Title Co. of Lane County. In
June, 1998, they borrowed an additional $70,000 from the same party. Eugene C.
Albert has collateralized these loans with real estate owned by him. All of
the proceeds from these loans have been used by the Company for working
capital, primarily to purchase Contracts.
The management and staff, and the officers, directors and shareholders
(and their families and related entities or trusts) may, at their option,
purchase Investment Certificates directly from the Company on the same terms as
other unrelated investors.
Conflicts of interest could arise between holders of Investment
Certificates who are management and staff, officers, directors and shareholders
(and their families and related entities, including trusts), including those
conflicts arising because of such persons', entities' or trusts' knowledge of
the Company's affairs, and those holders of Investment Certificates who have no
such relationship with or knowledge of the Company, in the event of a decline
in the Company's prospects or any impending financial or liquidity crisis that
may threaten the Company because both groups would be general creditors of the
Company seeking payment from the same pool of Company assets.
Tom W. Palmer and Eugene Albert have guaranteed the payments under the
three-year lease of the Company's principal offices, which expires October 31,
2000. The current annual rental rate under the lease is $14,934, which
increases to $15,840 in the third year. See "Business - Properties."
<PAGE>
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth information concerning the shares of the
Company's common stock owned of record and beneficially as of the date hereof
by each person known to the Company to own of record or beneficially five
percent (5%) or more of the Company's common stock; each officer or director of
the Company who owns of record or beneficially common stock; and stock holdings
of all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Beneficial Ownership
--------------------------------------------
Owner's Percent after
Name & Address Shares Percent this Offering
- -------------------------- ------ ------- -------------
<S> <C> <C> <C>
Tom W. Palmer 100 33.3% 33.3%
2274 Marie Lane
Eugene, OR 97408
Eugene C. Albert 100 33.3% 33.3%
2358 Birch Lane
Eugene, OR 97403
Ted W. Palmer Trust 100 33.3% 33.3%
Almost Idaho Ranch
Shearer Lake on Bench Road
Newport, WA 99156
(All Officers and
Directors as a Group) 300 100.0% 100.0%
</TABLE>
Tom W. Palmer, Eugene C. Albert and Ted W. Palmer may be deemed to be
"promoters" and "parents" of the Company within the meaning of the Securities
Act of 1933, as amended, and state securities or "Blue Sky" laws.
Tom W. Palmer, Eugene C. Albert and Ted W. Palmer through the Ted W.
Palmer Trust have entered into a Buy-Sell Agreement dated January 20, 1998
granting each other a right of first refusal to purchase their respective
shares in the Company and an option first for the Company to purchase, and then
for each other to purchase, the shares of any of them that may become deceased,
disabled or divorced. This arrangement is intended to foster stability within
the Company by inhibiting a change in control of the Company upon the death,
disability or divorce of any of the founding shareholders.
DESCRIPTION OF SECURITIES
-------------------------
The Company's three directors are its founders and the owners of all of
its outstanding capital stock, all of which is common stock. See "Management"
and "Principal Shareholders."
The only other securities outstanding as of July 31, 1998 are $1,467,476
of unsecured promissory notes, most of which accrue interest at the rate of 12%
per annum, held by the Company's management and others with relationships to
the Company or its management. These promissory notes and the Investment
Certificates in this offering are unsecured obligations that are on a par with
each other in right of payment; that is, holders of the promissory notes and
Investment Certificates would both share as general creditors of the Company in
the event of any liquidation of the Company. The Company's $3,000,000 bank
line-of-credit, of which $2,687,431 was outstanding at July 31, 1998, is
secured by all of the Company's assets, including its Contract and Loan
portfolio, which constitutes the Company's principal asset.
INVESTMENT CERTIFICATES.
- ------------------------
The Investment Certificates in this offering consist of fixed-rate Short-
Term Investment Certificates and fixed-rate Long-Term Investment Certificates
that are unsecured general obligations of the Company. Certificates are being
offered in denominations of $1,000, and purchasers will be registered as the
"holders" of the Certificates on the books of the Company. Interest on the
Certificates will be paid to holders within the first five days of each
calendar quarter.
Interest on the Certificates accrues at a fixed rate, which initially is
8.00% annually for the Short-Term Certificates and 8.75% annually for the Long-
Term certificates. The terms of the Investment Certificates are initially two
years for the Short-Term Certificates and four years for the Long-Term
Certificates. The interest rate and the term may be changed for new Investment
Certificates of either type at the discretion of the Company from time-to-time
to reflect market and other conditions. However, the interest rate for either
type of Certificate will not exceed 12% annually nor be less than 6% annually,
and the term for Long-Term Certificates will not exceed five years, nor will
the term for Short-Term Certificates be less than eighteen months. The
interest rate and date of maturity for each Certificate are determined at the
time of its sale. Any changes in the interest rate or terms applicable to new
Certificates will have no effect upon the interest rate or terms applicable to
Certificates then outstanding.
You may liquidate your Certificates prior to maturity upon 90 days notice
to the Company, but upon such pre-maturity liquidation no interest will be
earned on the Certificates during the notice period. On the date of maturity
of a Certificate, you should present it to the Company for payment, as interest
on the Certificate ceases to accrue after that date.
If interest on an Investment Certificate is not timely paid within ten
days of the payment date, the entire sum of principal and interest shall, at
your option, immediately become due and payable without notice. In the event
you are required to institute collection proceedings on an Investment
Certificate, the Company will pay all your costs, including reasonable
attorneys fees.
There is no collateral or security interest securing repayment of the
Certificates, no guarantees or insurance by governmental agencies or other
third parties assuring repayment of the Certificates, no sinking fund, and no
provision for the payment of any amount of principal prior to maturity. As an
unsecured general creditor of the Company, in the event of liquidation of the
Company, you as a holder of Certificates would share equally with other general
creditors of the Company in the remaining unsecured assets of the Company, if
any. The Certificates are subordinated to all bank borrowings by the Company
both now and in the future.
You may transfer your Certificates on the Company's Certificate ownership
records by signing the form of assignment on the back of the Certificate and
delivering it to the Company for registration of the transfer on the Company's
books so that the new owner may receive subsequent interest payments. However,
there is no trading market for the Company's Investment Certificates, and the
Company does not expect that a trading market will arise in the future.
COMMON STOCK.
- -------------
All of the shares of common stock of the Company are owned by the
Company's founders and no common stock is being offered to investors in this
offering.
Each holder of common stock is entitled to one vote for each share held of
record and to a pro-rata share of any dividends declared on the common stock by
the Board of Directors from funds legally available therefor. Upon liquidation
of the Company, each stockholder is entitled to share ratably in any assets
available for distribution after payment of all debts, including all Investment
Certificates. Stockholders have no preemptive, conversion or other
subscription rights and there are no redemption rights or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are validly issued, fully paid and non-assessable.
<PAGE>
PLAN OF DISTRIBUTION
--------------------
The Company is offering the Investment Certificates directly to investors
through Tom W. Palmer, the President and a Director of the Company, and Eugene
C. Albert, the Vice-President and a Director of the Company, who will not
receive a commission or other special compensation for these efforts.
Purchases of Certificates in the aggregate may not exceed 10% of your net
worth, and you must so represent on the Subscription Form.
As corporate officers and directors, Messrs. Palmer and Albert are subject
to indemnification under the Company's by-laws against, among other things,
liability under the Securities Act of 1933. To the extent that indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
Messrs. Palmer and Albert, the Company has been advised that in the opinion of
the Securities and Exchange Commission this indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
- -------------------------------------------------------------------------------
IN ORDER TO PURCHASE INVESTMENT CERTIFICATES, INVESTORS SHOULD FILL OUT
THE SUBSCRIPTION FORM ON THE INSIDE BACK COVER OF THIS PROSPECTUS AND FORWARD
IT, TOGETHER WITH A CHECK OR MONEY ORDER FOR THE PURCHASE PRICE, TO TOM W.
PALMER, PRESIDENT, OR EUGENE C. ALBERT, VICE-PRESIDENT, CREDIT CONCEPTS, INC.,
2149 CENTENNIAL PLAZA, SUITE 2, EUGENE, OREGON 97401, TELEPHONE (541) 342-8545.
THE PURCHASED INVESTMENT CERTIFICATES, IN DENOMINATIONS OF $1,000, WILL BE
REGISTERED IN THE NAMES OF THE RESPECTIVE INVESTORS ON THE BOOKS OF THE COMPANY
AND PROMPTLY FORWARDED TO THEM AT THE ADDRESSES SET FORTH ON THE SUBSCRIPTION
FORM.
- -------------------------------------------------------------------------------
LEGAL MATTERS
-------------
The legality of the Investment Certificates has been passed upon by Karr
Tuttle Campbell, Portland, Oregon.
EXPERTS
-------
The balance sheet as of July 31, 1998 and the related statements of
income, cash flows and changes in shareholders' equity for the seven months
ended July 31, 1998 included in this Prospectus have been included in reliance
on the report of Yergen and Meyer LLP, independent auditors, given upon the
authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
----------------------
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act with respect to
the Investment Certificates. This Prospectus, which constitutes a part of the
Registration Statement, omits certain information contained in accordance with
the Securities Act and the rules and regulations of the Commission thereunder.
For further information with respect to the Company and the Investment
Certificates, please see the Registration Statement and its exhibits and
schedules filed with the Commission. Statements contained in this Prospectus
concerning the provisions of such documents are necessarily summaries of such
documents, and you should refer to the copy of the applicable document filed
with the Commission as an exhibit to the Registration Statement for complete
details. The Registration Statement and the exhibits thereto may be inspected,
without charge, at the public reference facilities of the Commission at the
principal office of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048, and the Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or
any part thereof may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York, and Chicago, Illinois, at
prescribed rates. In addition, the Registration Statement and its exhibits and
schedules may be accessed electronically at the Commission's web site on the
Internet at www.sec.gov.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended and, in files periodic reports and other
information with the Commission. Such reports and other information can be
inspected and copied at the addresses, and may be accessed electronically at
the above web site. These reports and other information can also be inspected
at the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
<PAGE>
CREDIT CONCEPTS, INC.
FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
Period Ended July 31, 1998
<PAGE>
Yergen and Meyer LLP
--------------------------------------
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Credit Concepts, Inc.
Eugene, Oregon
We have audited the accompanying balance sheet of Credit Concepts, Inc. as of
July 31, 1998, and the related statements of income, stockholders' equity, and
cash flows for the periods from inception (October 1, 1997) to December 31,
1997, and January 1, 1998, to July 31, 1998. 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 audits
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Credit Concepts, Inc. as of
July 31, 1998, and the results of its operations and its cash flows for the
initial period then ended, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, the company began operating
October 1, 1997, as a limited liability company (LLC) and incorporated the
business effective January 1, 1998. These financial statements report the
cumulative results of operations.
/s/ Yergen and Meyer, LLP
August 19, 1998
<PAGE>
<TABLE>
CREDIT CONCEPTS, INC.
BALANCE SHEET
July 31, 1998
<CAPTION>
ASSETS
<S> <C>
Cash $ 55,003
-------------
Finance receivables:
Contracts 4,325,162
Loan origination costs 35,148
Allowance for credit losses (191,000)
Interest receivable on contracts 64,500
-------------
Finance Receivables, Net 4,233,810
Stock subscriptions receivable 120,000
Equipment and leasehold improvements, net 33,685
Other assets 41,133
-------------
TOTAL $ 4,483,631
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Debt:
Bank line of credit $ 2,687,431
Other notes payable 301,500
Subordinated notes payable to stockholders 1,165,976
Accounts payable and accrued expenses 14,305
Interest payable 23,149
-------------
Total Liabilities 4,192,361
-------------
STOCKHOLDERS' EQUITY
Common stock, no par value, 1,000 shares
authorized, 300 issued and outstanding 150,000
Additional paid-in-capital 206,842
Retained earnings (65,572)
-------------
Total Stockholders' Equity 291,270
-------------
TOTAL $ 4,483,631
=============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE> CREDIT CONCEPTS, INC.
STATEMENT OF INCOME
For the 7 Months Ended July 31, 1998 and
the Period from Inception (October 1, 1997) to December 31, 1997
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
REVENUES
Interest on contracts $ 468,116 $ 5,901
Other income 3,140 246
------------ ------------
Total Revenues 471,256 6,147
------------ ------------
EXPENSES
Interest 154,671 3,815
Salaries 79,017 30,408
Provision for credit losses 231,129 -
Other operating expenses 72,011 15,082
------------ ------------
Total Expenses 536,828 49,305
------------ ------------
NET INCOME (LOSS) $ (65,572) $ (43,158)
============ ============
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
CREDIT CONCEPTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the 7 Months Ended July 31, 1998 and
the Period from Inception (October 1, 1997) to December 31, 1997
<CAPTION>
Credit
Concepts,LLC Credit Concepts, Inc.
------------ ----------------------------------------------------
Additional
Members Common Paid-in Retained
Equity Stock Capital Earnings Totals
------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Members Contribution
at Inception $ 451,000 $ - $ - $ - $ 451,000
Net (loss) (43,158) (43,158)
----------- ----------- ----------- ------------ -----------
Balance at December 31, 1997 $ 407,842 $ - $ - $ - $ 407,842
Transfer of Interest to Corporation
at 1/1/98 in exchange for:
Stock (236,842) 30,000 206,842 $ -
Notes (171,000) (171,000)
Additional stock subscriptions 120,000 120,000
Net (loss) (65,572) (65,572)
----------- ----------- ----------- ------------ -----------
Balance at July 31, 1998 $ - $ 150,000 $ 206,842 $ (65,572) $ 291,270
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
CREDIT CONCEPTS, INC.
STATEMENT OF CASH FLOWS
For the 7 Months Ended July 31, 1998 and
the Period from Inception (October 1, 1997) to December 31, 1997
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (65,572) $ (43,158)
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for credit losses on finance
receivables 231,129 -
Depreciation and amortization 37,616 561
Recoveries of finance receivables
previously charged off 42,665 -
Changes in assets and liabilities:
Accrued interest on finance receivables (64,500) -
Loan origination costs (35,148) -
Other assets (57,081) (18,209)
Accounts payable, accrued and other
liabilities 34,174 3,280
------------ ------------
Total Adjustments 188,855 (14,368)
------------ ------------
Net Cash Provided (Used) by Operating
Activities 123,283 (57,526)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans and contracts originated or purchased (4,410,614) (479,843)
Loans and contracts repaid 478,778 3,723
Additions to equipment and leasehold
improvements (8,655) (29,050)
------------ ------------
Net Cash (Used) by Investing Activities (3,940,491) (505,170)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 4,506,664 140,000
Repayment of debt (662,757) -
Members' contributions - 451,000
------------ ------------
Net Cash Provided by Financing Activities 3,843,907 591,000
------------ ------------
NET INCREASE IN CASH 26,699 28,304
CASH AT BEGINNING OF PERIOD 28,304 -
------------ ------------
CASH AT END OF PERIOD $ 55,003 $ 28,304
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CREDIT CONCEPTS, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY - Credit Concepts, Inc. (the Company) is in the business of
purchasing retail installment contracts from automobile dealers in connection
with the financing of used automobiles. The Company originally formed on
August 29, 1997, as Credit Concepts, L.L.C. and began operations during
October 1997. Effective January 1, 1998, the Company incorporated the
operations into the existing entity via a tax-free incorporation.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FINANCE RECEIVABLES - Finance receivables that management has the intent and
ability to hold for the foreseeable future or until maturity or payoff are
reported at their outstanding unpaid principal balances reduced by any
chargeoff or specific valuation accounts and net of any deferred fees or costs
on originated loans, or unamortized premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are capitalized and
recognized as an adjustment of the yield of the related contract.
Provisions for credit losses are recognized in amounts sufficient to maintain
the allowance for credit losses at a level adequate to cover losses of
principal and accrued interest in the existing finance receivable portfolio.
The allowance for credit losses is based upon management's evaluation of the
economic environment and the condition of outstanding loans and contracts
receivable at year end. During the year, the unpaid balances of delinquent
contracts receivable in excess of any related dealer guarantees are charged
against the allowance for credit losses when management determines that no
further collection efforts are economically beneficial. Changes in the
allowance for credit losses may occur in the near term and such changes may be
material to the financial position, results of operations and cash flows.
INTEREST INCOME RECOGNITION - For financial statement purposes, interest income
from finance receivables is recognized using the interest method. Accrual of
interest income on finance receivables is suspended when the Company's
management determines the loan recovery to be doubtful. While a loan is
classified as nonaccrual and the future collectibility of the recorded loan
balance is doubtful, collections of interest and principal are generally
applied as a reduction of principal.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Equipment and leasehold improvements are
stated at cost. Depreciation and amortization is provided on a straight-line
basis over the estimated useful lives of the related assets. Maintenance and
repairs are charged to expense as incurred; expenditures for additions,
improvements and replacements are capitalized. Upon disposal or retirement of
assets, the accounts are relieved of the related costs and accumulated
depreciation and resulting gains or losses are recognized in operations.
CORPORATE FORM AND INCOME TAXES - As noted, on January 1, 1998, Credit
Concepts, Inc. converted from a Limited Liability Company to an S Corporation
pursuant to the Internal Revenue Code. As an S Corporation, the income tax
liability arising from the taxable earnings of the Company is the
responsibility of the stockholders.
NOTE 2 - FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
As of July 31, 1998, information regarding the finance receivables is as
follows:
<TABLE>
<S> <C>
Number of contracts 842
Average Annual Percentage Rate (APR) of interest 30.8 %
Average contract balance $ 5,212
Average term of contract 41 mos.
Average age of contract 4.5 mos.
Average payment per month $ 230
</TABLE>
The terms of contracts are generally from one to five years. The Company
anticipates that a majority of contracts will be paid or renewed prior to
contractural maturity dates. Cash collections of finance receivables for the
period of inception to July 31, 1998, were $482,501. Additionally, the ratio
of cash collections to average period-end balances was approximately 19.6%.
Change in the allowance for credit losses is as follows:
<TABLE>
<S> <C>
Balance at inception (October 1, 1997) $ -
Provision charged to expense 231,084
Accounts charged off (82,749)
Recoveries 42,665
------------
Balance as of July 31, 1998 $ 191,000
============
</TABLE>
NOTE 3 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Balances as of July 31, 1998, are as follows:
<TABLE>
<S> <C>
Computer equipment $ 21,777
Leasehold improvements 2,223
Office furniture and equipment 13,705
------------
37,705
Accumulated depreciation and amortization (4,020)
------------
$ 33,685
============
</TABLE>
NOTE 4 - DEBT
Following is a summary of all debt held by the Company at July 31, 1998:
<TABLE>
<S> <C>
Bank line of credit (available credit line -
$3,000,000) - without collateral, interest at
the institution's prime rate (8.5% at July 31, 1998)
plus 2.25% due June 15, 1999, guaranteed by the
stockholders of Credit Concepts, Inc. $ 2,687,431
------------
Notes payable to various individuals - without
collateral, maturities to 2004, with interest
from 10% to 12%. 240,000
Notes payable to related party - without collateral,
no maturity with interest at 12%. 61,500
------------
Total other notes payable 301,500
------------
Subordinated notes payable to stockholders - without
collateral, no stated maturity, with interest at 12% 1,165,976
------------
Total $ 4,154,907
============
</TABLE>
The subordinated notes payable provide for subordination to any present and
future debt owed by Credit Concepts, Inc. to any bank, insurance company or
other financial institution. Subordinated debt with stockholders and officers
of Credit Concepts, Inc. of $1,165,976 is also subordinated to other notes
payable of $301,500.
Scheduled maturities of debt in subsequent fiscal years are as follows:
<TABLE>
<S> <C> <C>
1999 $ 2,737,431
2000 10,000
2001 -
2002 -
2003 -
Thereafter 1,437,476
------------
$ 4,184,917
============
</TABLE>
NOTE 5 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Cash paid during the year for interest $ 131,522 $ 3,815
</TABLE>
Non-cash financing activities consisted of issuance of additional stock
subscriptions in the amount of $120,000, during 1998.
NOTE 6 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate that
value:
CASH AND CASH EQUIVALENTS. For cash, the carrying amount is the estimated fair
value.
FINANCE RECEIVABLES. There are generally no quoted market prices available for
finance receivables. The net fair value of such receivables is estimated to
approximate the net carrying value based upon interest rates as of July 31,
1998.
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
<TABLE>
CREDIT CONCEPTS, INC.
OTHER OPERATING EXPENSES
For the 7 Months Ended July 31, 1998 and
the Period from Inception (October 1, 1997) to December 31, 1997
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
Accounting services $ 3,840 $ 143
Advertising 102 -
Amortization 21,549 2,146
Automobile expense 23 -
Bank charges 13 88
Business meetings 509 -
Collection and repossession charges 1,898 -
Commission expense - 3,895
Contributions 55 -
Depreciation 3,459 561
Dues and subscriptions 1,284 359
Employee benefits 567 150
Equipment repairs 9 154
Insurance 888 617
Legal services 5,222 -
Licenses, fees and permits 90 -
Life insurance 2,156 -
Meals and entertainment 2,829 264
Miscellaneous 4,978 -
Office rent 8,712 2,489
Office supplies and expense 7,398 2,367
Telephone 4,757 787
Travel 1,673 1,062
----------- ------------
TOTAL OTHER OPERATING EXPENSES $ 72,011 $ 15,082
============ ============
</TABLE>
<PAGE>
SUBSCRIPTION FORM
-----------------
Credit Concepts, Inc.
2149 Centennial Plaza, Suite 2
Eugene, Oregon 97401
Attention: Tom W. Palmer or Eugene C. Albert
I hereby subscribe to purchase $_________________ (must be multiples of
$1,000) principal amount of Short-Term Investment Certificates and $___________
(must be multiples of $1,000) principal amount of Long-Term Investment
Certificates of Credit Concepts, Inc. ("Company"). I enclose a check or money
order for the full amount of the purchase price with this Subscription Form. I
understand that this subscription form must be accepted by the Company before
it becomes binding.
I acknowledge receipt of the Company's Prospectus dated November __, 1998
in connection with the Investment Certificates and confirm to you that the
amount of my subscription, together with all other Investment Certificates of
the Company now held by me, does not exceed ten percent (10%) of my personal
net worth.
Date: ___________________
____________________________________ ____________________________________
(Name of Investor - please print) (Name of Co-Investor, if any
- please print)
X___________________________________ X____________________________________
(Signature of Investor) (Signature of Co-Investor, if any)
Address: __________________________ Address: ____________________________
___________________________________ _____________________________________
___________________________________ _____________________________________
___________________________________ _____________________________________
Telephone Number:___________________ Telephone Number:____________________
Social Security or Tax I.D. No.: Social Security or Tax I.D. No.:_____
____________________________________ _____________________________________
(For Company use only):
Accepted on ________________________
(Date)
Credit Concepts, Inc.
By:________________________________
Its:_______________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ----------------------------------------------------
The Oregon Business Corporation Act (Or. Rev. Stat. Section 60.047(2)(3)
and Sections 60.387 to 60.414) authorizes a corporation, through its articles
of incorporation and bylaws, to limit the liability of directors and to grant
indemnity to directors, officers, employees or agents for actions taken with
respect to the corporation in their respective capacities as directors,
officers, employees or agents. Indemnification for such liabilities may be
provided to an officer, director, employee or agent based upon the
determination by a vote of the disinterested Board of Directors, a vote by a
special committee of the Board of Directors, by the determination of a special
legal counsel or by a vote of the shareholders that the director, officer,
employee or agent may properly be indemnified under the statute. Except as set
forth below, this includes liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article VI of the Company's Articles of Incorporation (Exhibit 3(a)
hereto) limits a director's liability to the Company or its shareholders for
monetary damages arising out of his or her conduct as a director, except in
certain circumstances involving breach of the director's duty of loyalty to the
Company or its shareholders, acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of the law, any unlawful
distribution under ORS 60.367, or any unlawful distribution or any transaction
in which the director derived an improper personal benefit. Article V of the
Company's Bylaws (Exhibit 3(b) hereto) provide for indemnification of the
Company's directors in cases in which the director successfully defends the
action and in certain other circumstances in which the director acts in good
faith, believes the conduct to be in the corporation's best interest or not
opposed to it, and (for alleged criminal conduct) has no reasonable cause to
believe the conduct to have been unlawful, except for acts for which the
director is ultimately adjudged liable to the corporation. The Company may
also advance litigation expenses to directors, officers, agents and employees
under certain circumstances.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
- ------------------------------------------------------
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions and the non-accountable expense
allowance payable by the Company in connection with the issuance and
distribution of the securities being registered. All amounts shown are
estimated except the SEC Registration Fee.
<TABLE>
<S> <C> <C>
SEC Registration Fee . . . . . . . . . . . . .$ 2,780
Blue Sky Fees and Expenses . . . . . . . . . . 500
Printing and Engraving Expenses. . . . . . . . 10,000
Legal Fees and Expenses. . . . . . . . . . . . 35,000
Accounting Fees and Expenses . . . . . . . . . 25,000
Miscellaneous Expenses . . . . . . . . . . . . 26,720
----------
Total. . . . . . . . . . . . . . . . . . . . .$ 100,000
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
- --------------------------------------------------
(a) In connection with the founding of the Company in August, 1997, Tom
W. Palmer, Eugene C. Albert and Ted W. Palmer, currently the Company's
President and a Director, the Company's Vice-President and a Director and a
Company Director, respectively, were issued all of the equity interests in
Credit Concepts, L.L.C., the Company's predecessor, in reliance upon Section
4(2) of the Securities Act.
(b) On October 15, 1997, the Company sold a $50,000 promissory note
bearing interest at 12% per annum to Ted W. Palmer, a Director of the Company,
in reliance upon Section 4(2) of the Securities Act.
(c) On October 16, 1997, the Company sold a $5,000 promissory note
bearing interest at 12% per annum to Eugene C. Albert, the Vice-President,
Secretary and a Director of the Company, in reliance upon Section 4(2) of the
Securities Act.
(d) On November 15, 1997, the Company sold a $30,000 promissory note
bearing interest at 12% per annum to Eugene C. Albert, the Vice-President,
Secretary and a Director of the Company, and a $100,000 promissory note bearing
interest at 12% per annum to Ted W. Palmer, a Director of the Company, in
reliance upon Section 4(2) of the Securities Act.
(e) On November 18, 1997, the Company sold a $116,000 promissory note
without interest to Tom W. Palmer, the President and a Director of the Company,
and his wife in reliance upon Section 4(2) of the Securities Act.
(f) On December 10, 1997, the Company sold a $150,000 promissory note
bearing interest at 12% per annum to Ted W. Palmer, a Director of the Company,
in reliance upon Section 4(2) of the Securities Act.
(g) On January 15, 1998, the Company sold a $40,000 promissory note
bearing interest at 12% per annum to Kimberly M. Coleman, the General Manager
of the Company, and her husband in reliance upon Section 4(2) of the Securities
Act.
(h) On January 20, 1998, Tom W. Palmer, Eugene C. Albert and Ted W.
Palmer Trust each purchased 100 shares of capital stock of Credit Concepts,
Inc. for $50,000 in reliance upon Section 4(2) of the Securities Act.
(i) On February 24, 1998, the Company sold a $30,000 promissory note
bearing interest at 12% per annum to Eugene C. Albert, the Vice-President,
Secretary and a Director of the Company, in reliance upon Section 4(2) of the
Securities Act.
(j) On March 9, 1998, the Company sold a $10,000 promissory note bearing
interest at 12% per annum to Eugene C. Albert, the Vice-President, Secretary
and a Director of the Company, and a $15,000 promissory note bearing interest
at 13% per annum to Tom W. Palmer, the President and a Director of the Company,
and his wife in reliance upon Section 4(2) of the Securities Act.
(k) On March 16, 1998, the Company sold two $50,000 promissory notes,
each bearing interest at 12% per annum, to Ted W. Palmer, a Director of the
Company, in reliance upon Section 4(2) of the Securities Act.
(l) On March 25, 1998, the Company sold a $10,000 promissory note bearing
interest at 12% per annum to Kimberly M. Coleman, the General Manager of the
Company, and her husband in reliance upon Section 4(2) of the Securities Act.
(m) On March 26, 1998, the Company sold a $3,000 promissory note bearing
interest at 12% per annum to Eugene C. Albert, the Vice-President, Secretary
and a Director of the Company, and a $7,000 promissory note bearing interest at
12% per annum to Tom W. Palmer, the President and a Director of the Company,
and his wife in reliance upon Section 4(2) of the Securities Act.
(n) On April 1, 1998, the Company sold a $10,000 promissory note bearing
interest at 12% per annum to Kimberly M. Coleman, the General Manager of the
Company, and her husband in reliance upon Section 4(2) of the Securities Act.
On the same date, the Company sold a $50,000 promissory note bearing interest
at 12% per annum to M. Jacobs Fine Furniture Profit Sharing Plan, the
"accredited" owner of which furniture store members of the Company's management
had an existing personal and business relationship, in reliance upon Section
4(2) of the Securities Act.
(o) On April 8, 1998, the Company sold a $40,000 promissory note bearing
interest at 12% per annum to Amvesco, Inc. dba Western Pioneer Title Co. of
Lane County, with whom members of the Company's management had an existing
personal and business relationship, in reliance upon Section 4(2) of the
Securities Act.
(p) On April 15, 1998, the Company sold a $60,000 promissory note bearing
interest at 12% per annum to Bjarnie & Elsie Abrahamson, "accredited" persons
with whom members of the Company's management had an existing personal and
business relationship, in reliance upon Section 4(2) of the Securities Act.
(q) On May 4, 1998, the Company sold a $100,000 promissory note bearing
interest at 12% per annum to Ted W. Palmer, a Director of the Company, in
reliance upon Section 4(2) of the Securities Act.
(r) On May 18, 1998, the Company sold a $32,000 promissory note bearing
interest at 12% per annum to Melvin S. Martinson and Leorne E. Martinson,
"accredited" persons with whom members of the Company's management had an
existing personal and business relationship, in reliance upon Section 4(2) of
the Securities Act.
(s) On May 28, 1998, the Company sold a $25,000 promissory note bearing
interest at 12% per annum to William and Debra Cox, "accredited" persons with
whom members of the Company's management had an existing personal and business
relationship, in reliance upon Section 4(2) of the Securities Act.
(t) On June 18, 1998, the Company sold a $4,500 promissory note bearing
interest at 12% per annum to Tom W. Palmer, the President and a Director of the
Company, and his wife in reliance upon Section 4(2) of the Securities Act.
(u) On June 25, 1998, the Company sold a $100,000 promissory note bearing
interest at 12% per annum to Ted W. Palmer, a Director of the Company, in
reliance upon Section 4(2) of the Securities Act. On the same date, the
Company sold a $70,000 promissory note bearing interest at 12% per annum to
Amvesco, Inc. dba Western Pioneer Title Co. of Lane County, with whom members
of the Company's management had an existing personal and business relationship,
in reliance upon Section 4(2) of the Securities Act.
(v) On June 30, 1998, the Company sold a $15,500 promissory note bearing
interest at 12% per annum to Tom W. Palmer, the President and a Director of the
Company, and his wife in reliance upon Section 4(2) of the Securities Act.
(w) On July 14, 1998, the Company sold a $10,000 promissory note bearing
interest at 10% per annum to Stanley B. Woods and Jo Ellen Woods, "accredited"
persons with whom members of the Company's management had an existing personal
and business relationship, in reliance upon Section 4(2) of the Securities Act.
(x) On July 27, 1998, the Company sold a $450,000 promissory note bearing
interest at 12% per annum to Ted W. Palmer, a Director of the Company, Tom W.
Palmer, the President and a Director of the Company, and Eugene C. Albert, the
Vice-President, Secretary and a Director of the Company, in reliance upon
Section 4(2) of the Securities Act.
The registrant is relying upon Rule 152 of the Securities Act to preclude
the integration of present offering with the offer and sale of the above equity
interests, shares and promissory notes in connection with registrant's reliance
upon Section 4(2) in the offer and sale of the above equity interests, shares
and promissory notes.
<PAGE>
<TABLE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
- -----------------------------------------------------
<CAPTION>
Number Description
------ -----------
<S> <C> <C>
3(a) Articles of Incorporation
3(b) By-Laws
4(a) Specimen Short-Term Investment Certificate
4(b) Specimen Long-Term Investment Certificate
5(a) Opinion of Karr Tuttle Campbell*
10(a) Form of Master Dealer Agreement with automobile dealers,
including Amendment to Master Dealer Agreement
10(b) Form of Contract purchased from automobile dealers
10(c) Bill of Sale dated January 20, 1998 with Albert Credit, LLC
10(d) Loan Agreement dated April 6, 1998 with Pacific Continental
Bank, and Amendment to Loan Agreement dated November 4, 1998
10(e) Promissory Note in favor of Pacific Continental Bank dated
April 6, 1998
10(f) Commercial Guaranty by Thomas W. Palmer dated April 6, 1998
10(g) Commercial Guaranty by Eugene C. Albert dated April 6, 1998
10(h) Commercial Guaranty by Ted W. Palmer dated April 6, 1998
10(i) Commercial Security Agreement dated April 6, 1998 with Pacific
Continental Bank
10(j) Commercial Security Agreement dated April 6, 1998 with Pacific
Continental Bank, including as collateral Thomas W. Palmer's
life insurance policy
10(k) Commercial Security Agreement dated April 6, 1998 with Pacific
Continental Bank, including as collateral Eugene C. Albert's
life insurance policy
10(l) Agreement to Provide Insurance dated April 6, 1998 with Pacific
Continental Bank
10(m) Assignment of Life Insurance Policy as Collateral dated
March 10, 1998 with Pacific Continental Bank for Thomas W.
Palmer's life insurance policy
10(n) Assignment of Life Insurance Policy as Collateral dated
March 10, 1998 with Pacific Continental Bank for Eugene C.
Albert's life insurance policy
10(o) Employment Agreement dated September 24, 1997 with Kimberly M.
Coleman
10(p) Buy-Sell Agreement dated January 20, 1998 between Ted W. Palmer,
Thomas W. Palmer and Eugene C. Albert
10(q) Lease Agreement dated October 14, 1997 with Keypac Leasing,
including Limited Guaranty
10(r) Form of Promissory Note evidencing loans from private investors
23(a) Consent dated August 19, of Yergen and Meyer LLP
- Consent of Karr Tuttle Campbell**
24(a) Power of Attorney by signers of registration statement***
27 Financial Data Schedule
- ----------------------------
* To be filed with subsequent amendment to this Registration Statement.
** To be included as part of Exhibit 5(a), Opinion of Karr Tuttle Campbell.
*** Set forth on signature page of registration statement.
</TABLE>
ITEM 28. UNDERTAKINGS.
- -----------------------
(a) INDEMNIFICATION FOR LIABILITIES.
--------------------------------
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(b) RULE 430A UNDERTAKINGS.
-----------------------
The undersigned Registrant hereby undertakes that:
(i) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of Prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time declared effective.
(ii) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned in the
city of Eugene, state of Oregon, on November 5, 1998.
CREDIT CONCEPTS, INC.
(Registrant)
By: /S/ Tom W. Palmer, President
------------------------------------
(Signature and Title)
POWER OF ATTORNEY
-----------------
Each person whose signature appears below constitutes and appoints Tom W.
Palmer, Eugene C. Albert and Ted W. Palmer, any of whom may act without the
joinder of the other, as his true and lawful attorneys-in-fact and agents with
full power of substitution and resubstitution, for him, and in his name, place
and stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) and supplements to this Registration Statement and
any registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Tom W. Palmer PRESIDENT AND DIRECTOR November 5, 1998
- ----------------------- ----------------------- ---------------------
(Tom W. Palmer) (Title) (Date)
VICE-PRESIDENT,
/s/ Eugene C. Albert SECRETARY AND DIRECTOR November 5, 1998
- ----------------------- ----------------------- ---------------------
(Eugene C. Albert)) (Title) (Date)
/s/ Ted W. Palmer DIRECTOR November 5, 1998
- ----------------------- ----------------------- ---------------------
(Ted W. Palmer) (Title) (Date)
<PAGE>
EXHIBIT 3(a)
ARTICLES OF INCORPORATION
OF
CREDIT CONCEPTS, INC.
The undersigned natural person of the age of 18 years of more, acting as
Incorporator under the Oregon Business Corporation Act, adopts the following
Articles of Incorporation:
ARTICLE I
NAME OF CORPORATION
The name of the corporation is CREDIT CONCEPTS, INC.
ARTICLE II
AUTHORIZED SHARES
The aggregate number of shares that the Corporation shall have authority
to issue is 1,000 shares without par value.
ARTICLE III
PURPOSE
The purpose for which the Corporation is organized is to engage in any
lawful activity for which corporations may be organized under the Oregon
Business Corporation Act.
ARTICLE IV
REGISTERED AGENT AND OFFICE
The name of the initial Registered Agent and address of the initial
Registered Agent is:
Thomas W. Palmer
2149 Centennial Plaza, Suite 2
Eugene, OR 97401
ARTICLE V
BOARD OF DIRECTORS
The members of the governing board shall be known as the Board of
Directors, and the number thereof shall be fixed by the Bylaws of the
Corporation. The initial Board of Directors shall consist of three Directors
whose names and addresses are:
Ted W. Palmer Thomas W. Palmer
PO Box 1680 2149 Centennial Plaza, Suite 2
Newport, WA 99156 Eugene, OR 97401
Eugene C. Albert
2149 Centennial Plaza, Suite 2
Eugene, OR 97401
ARTICLE VI
LIABILITY OF DIRECTORS
No Director shall be liable to the Corporation or its Shareholders for
monetary damages arising out of conduct as a Director, except for:
A. Any breach of the Director's duty of loyalty to the Corporation or
its Shareholders;
B. Acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;
C. Any unlawful distribution under ORS 60.367; or
D. Any transaction from which the Director derived an improper personal
benefit.
ARTICLE VII
INCORPORATOR
The name and address of the Incorporator signing the Articles of
Incorporation is:
Eugene C. Albert
2149 Centennial Plaza, Suite 2
Eugene, OR 97401
ARTICLE VIII
ADDRESS FOR NOTICES
All notices should be mailed to the Corporation at 2149 Centennial Plaza,
Suite 2, Eugene, OR 97401
DATED this 20th day of January, 1998.
____________________________________
Eugene C. Albert
Incorporator
STATE OF OREGON )
)ss.
County of Lane )
I, the undersigned Incorporator, declare under the penalties of perjury
that I have examined the foregoing, and that to the best of my knowledge and
belief, it is true, correct and complete.
____________________________________
Eugene C. Albert
SUBSCRIBED AND SWORN to before me this 20th day of January, 1998.
____________________________________
NOTARY PUBLIC FOR OREGON
My Commission Expires:______________
Person to contact about this filing:
Robert A. Smejkal, Attorney
Telephone: (541) 345-3330
<PAGE>
EXHIBIT 3(b)
BYLAWS
OF
CREDIT CONCEPTS, INC.
ARTICLE 1. SHAREHOLDERS
1.1 ANNUAL SHAREHOLDERS' MEETING. The annual meeting of shareholders
shall be held within 90 days of the close of the Corporation's fiscal year, at
a time and date as is determined by the Corporation's Board of Directors for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting.
If the election of directors shall not be held within the time designated
herein for any annual meeting of the shareholders, or at any subsequent
continuation after adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon
thereafter as convenient.
1.2 SPECIAL SHAREHOLDERS' MEETINGS. Special meetings of the
shareholders, for any purpose or purposes, described in the meeting notice,
may be called by the president, the secretary, or by the Board of Directors,
and shall be called by the president at the request of the holders of not less
than one-tenth of all outstanding votes of the Corporation entitled to be cast
on any issue at the meeting.
1.3 PLACE OF SHAREHOLDERS' MEETING. The Board of Directors may
designate any place within the county in Oregon where the Corporation has its
principal office as the place of meeting for any annual or special meeting of
the shareholders, unless all the shareholders entitled to vote at the meeting
agree by written consents (which may be in the form of waiver of notice or
otherwise) to another location, which may be either within or without the
state of Oregon. If no designation is made, the place of meeting shall be the
principal office of the Corporation in the state of Oregon.
1.4 NOTICE OF SHAREHOLDERS' MEETING
1.4.1 REQUIRED NOTICE. Written or printed notice of a meeting shall
state the date, time and place of the meeting, and may state the manner in
which a shareholder may participate by telephone. In case of a special
meeting, the purpose or purposes for which the meeting is called shall be
stated. Notice shall be given not earlier than 60 days nor less than 10 days
before the meeting date, and may be given personally, by mail, or by telephone
facsimile, by or at the direction of the president, the secretary, the Board
of Directors or the persons calling the meeting, to each shareholder of record
entitled to receive notice of the meeting. The notice is effective when
mailed, if it is mailed postpaid and is correctly addressed to the
shareholder's address shown in the Corporation's current record of
shareholders, or when sent, if sent by telephone facsimile to the
shareholder's facsimile number shown in the Corporation's current record of
shareholders.
1.4.2 ADJOURNED MEETING. When a meeting is adjourned for more than
120 days after the date fixed for the original meeting, or when a
redetermination of the persons entitled to receive notice of the adjourned
meeting is required by law, notice of the adjourned meeting shall be given in
the same manner as required for an original meeting. In all other cases no
notice of the adjournment or of the business to be transacted at the adjourned
meeting need be given other than by announcement at the original meeting
before adjournment.
1.5 QUORUM.
1.5.1 A majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum for the transaction of business
at any shareholders' meeting. If a person attends a meeting for the express
purpose of objecting to the transaction of any business on the grounds that
the meeting is not lawfully called or convened, the shares held by that person
or represented by proxy given to that person shall not be included for
purposes of determining whether a quorum is present. Once a share is
represented for any purpose at a meeting, other than for the purpose of
objecting as provided above, it is deemed present for quorum purposes for the
remainder of the meeting and any adjournment thereof, unless a new record date
is or must be set for the adjourned meeting. The persons present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough persons to leave less than a quorum.
1.5.2 In the absence of a quorum, a majority of the shares
represented in person or by proxy may adjourn the meeting from time to time
until a quorum shall attend. Any business which might have been transacted at
the original meeting may be transacted at the adjourned meeting if a quorum
exists.
1.6 PROXIES. At all meetings of shareholders, a shareholder may vote in
person or by a proxy that is executed in writing by the shareholder or that is
executed by the shareholder's duly authorized attorney-in-fact. Such proxy
shall be filed with the secretary of the Corporation or other person
authorized to tabulate votes before or at the time of the meeting. No proxy
shall be valid after 11 months from the date of its execution unless otherwise
provided in the proxy.
1.7 SHAREHOLDERS OF RECORD. The persons entitled to receive notice of
or to vote at any shareholders' meeting shall be those persons designated as
shareholders in the stock transfer books of the Corporation at the close of
business on the date the notice is mailed or otherwise transmitted, or on such
other date as determined in advance by the Board of Directors, which date
shall be not more than 60 nor less than 10 days before the meeting.
1.8 VOTING OF SHARES.
1.8.1 Each shareholder shall be entitled to one vote on each matter
submitted to a vote at a meeting of the shareholders for each share of voting
stock standing in the name of the shareholder on the stock transfer books of
the Corporation.
1.8.2 Shares held in the name of another corporation may be voted by
such officer, agent or proxy as the Bylaws of such corporation may prescribe,
or, in the absence of such provision, as the Board of Directors of such
corporation may determine.
1.8.3 Shares held by a personal representative, administrator,
executor, guardian or conservator may be voted by that person, either in
person or by proxy, without a transfer of such shares into the name of that
person. Shares held in the name of a trustee may be voted by the trustee,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by that trustee without a transfer of such shares into the names of the
trustee.
1.8.4 A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
1.9 MAJORITY VOTE. When a quorum is present or represented at any
meeting in person or by proxy and entitled to vote on the subject matter,
action on any matter, other than the election of directors, is approved if the
votes cast favoring the action exceed the votes cast opposing the action,
unless the vote of a greater number is required by law, the Articles of
Incorporation or these Bylaws, in which case the contrary provision shall be
controlling.
1.10 ACTION BY SHAREHOLDERS WITHOUT MEETING. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if one or more consents in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to
the subject matter thereof and are delivered to the Corporation for inclusion
in the minute book. If the act to be taken requires that notice be given to
nonvoting shareholders, the Corporation shall give the nonvoting shareholders
written notice of the proposed action at least 10 days before the action is
taken, which notice shall contain or be accompanied by the same material that
would have been required if a formal meeting had been called to consider the
action. A consent signed under this section has the effect of a meeting vote
and may be described as such in any document.
ARTICLE 2. DIRECTORS
2.1 NUMBER. The business and affairs of the Corporation shall be
managed and controlled by a board of directors consisting of not less than one
member. If only one director is provided for in these Bylaws, words in the
plural shall include the singular. Each director shall hold office until the
earlier of the following:
2.1.1 That director's successor is elected;
2.1.2 That director's death; or
2.1.3 That director resigns or is removed in accordance with the
provisions of these Bylaws.
2.2 ELECTION OF DIRECTORS. Directors shall be nominated for and elected
to numbered positions. Each share entitled to vote in the election shall have
one vote for each numbered position. Voting shall not be cumulative. The
director for each numbered position shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a shareholders'
meeting at which a quorum is present. It is not necessary that directors be
residents of the state of Oregon or shareholders of the Corporation.
2.3 ANNUAL MEETINGS. A regular annual meeting of the Board of Directors
shall be held without notice other than this Bylaw immediately after the
adjournment of the annual meeting of the shareholders.
2.4 SPECIAL MEETINGS. Special meetings of the Board of Directors for
any purpose or purposes may be called at any time by the president or by any
director.
2.5 PLACE OF MEETINGS. Meetings of the Board of Directors shall be at
the Corporation's principal office or any other place designated by the Board
of Directors. Meetings of the Board of Directors may be held by means of
conference telephone or similar communications equipment by which all persons
participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
2.6 NOTICE OF SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called for any reasonable time by, or at the direction of,
the president or any member of the Board of Directors. The special meeting
must be preceded by at least two days' notice of the date, time and place of
the meeting. Notice shall be given to each director by at least one of the
following methods:
2.6.1 ORAL NOTICE. Oral notice is effective when communicated.
2.6.2. Written Notice. Written notice is effective at the earliest of
the following:
(1) When received;
(2) Five days after its deposit in the United States mail, as evidenced
by the postmark, if mailed postpaid and correctly addressed to the address
shown in the Corporation's records; or
(3) On the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested and the receipt is signed by or on
behalf of the addressee.
2.6.3 FACSIMILE. Notice may be given by facsimile to any party who
gives written notice to the Corporation of willingness to receive notice by
this means. If notice is sent by facsimile, notice shall be deemed to be
effective when sent, if sent to the facsimile number maintained in the
corporate records.
2.7 WAIVER OF NOTICE. A director's attendance at or participation in a
meeting waives any required notice of the meeting unless the director at the
beginning of the meeting, or promptly upon the director's arrival, objects to
holding the meeting, or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
2.8 QUORUM. A majority of the number of directors in office immediately
before the meeting begins shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors. The affirmative vote of a
majority of directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors, unless the vote of a greater number of
directors is required by law, the Articles of Incorporation or these Bylaws,
in which case the contrary provision shall be controlling.
2.9 REMOVAL. Any director may be removed by the shareholders, with or
without cause. A director may be removed by the shareholders only at a
meeting called for the purpose of removing the director and the meeting notice
must state that the purpose, or one of the purposes, of the meeting is removal
of the director.
2.10 RESIGNATION. A director may resign at any time by delivering
written notice to the Board of Directors, its chairman or the Corporation. A
resignation is effective when the notice is received, unless the notice
specifies a later effective date. Once delivered, a notice of resignation is
irrevocable unless revocation is permitted by the Board of Directors. Unless
otherwise specified in the notice, the acceptance of such resignation shall
not be necessary to make it effective.
2.11 VACANCIES.
2.11.1 A vacancy in the Board of Directors shall exist upon the death,
resignation or removal of any director.
2.11.2 Vacancies in the Board of Directors may be filled by:
(1) The Board of Directors, by the earlier of 60 days after the creation
of the vacancy or the annual shareholder meeting. The remaining directors may
fill the vacancy by the affirmative vote of a majority of all directors
remaining in office.
(2) The shareholders at an annual or special meeting, if the directors
fail to fill the vacancy.
2.11.3 The shareholders shall elect the additional directors if the
number of directors is increased by amendment of these Bylaws.
2.11.4 A director elected to fill a vacancy by the Board of Directors
shall hold office until the next shareholders' meeting at which directors are
elected.
2.11.5 If the Board of Directors accepts the resignation of a director
tendered to take effect at a future time, a successor may be elected by the
remaining directors to take office when the resignation becomes effective.
2.12 COMPENSATION. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting or a stated salary as director. No such payments shall prevent any
director from servicing the Corporation in any other capacity and receiving
compensation for that service.
2.13 DIRECTORS' ACTION WITHOUT A MEETING. Unless the Articles of
Incorporation provide otherwise, any action required or permitted to be taken
by the Board of Directors at a meeting may be taken without a meeting if all
the directors take the action, each one signs a written consent describing the
action taken, and the consents are filed with the records of the Corporation.
Action taken by consent is effective when the last director signs the consent,
unless the consent specifies a different effective date. A signed consent has
the effect of a meeting vote and may be so described in any document.
ARTICLE 3. OFFICERS
3.1 DESIGNATION. The offices of this Corporation shall be a president
and a secretary and shall be appointed by the Board of Directors. The Board
of Directors or the president may appoint additional officers or assistant
officers, from time to time.
3.2 TERM. Each officer shall hold office until the earlier of the
following:
3.2.1 That officer's successor is duly appointed;
3.2.2 That officer's death; or
3.2.3 That officer resigns or is removed in accordance with the
provisions of these Bylaws.
3.3 REMOVAL. The Board of Directors may remove any officer at any time,
with or without cause. The president may remove any officer appointed by the
president at any time, with or without cause. Removal of an officer does not
affect the contract rights, if any, of the Corporation or the officer.
3.4 RESIGNATION. An officer may resign at any time by delivering
written notice to the Corporation. A resignation is effective when received,
unless the notice specifies a later effective date. If a resignation is made
effective at a later date and the Corporation accepts the future effective
date, the Board of Directors may fill the pending vacancy before the effective
date if the Board of Directors provides that the successor does not take
office until the effective date. Unless otherwise specified in the notice,
the acceptance of such resignation shall not be necessary to make it
effective.
3.5 COMPENSATION. The compensation, if any, of all the officers of the
Corporation shall be fixed by the president, unless otherwise designated by
the Board of Directors.
3.6 DUTIES. Each officer has the authority and shall perform the duties
set forth in these Bylaws and, to the extent consistent with these Bylaws, the
duties prescribed by the Board of Directors or by direction of an officer
authorized by the Board of Directors to prescribe the duties of other
officers.
3.7 PRESIDENT.
3.7.1 The president shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
the responsibility for the conduct and management of the business and fiscal
affairs of the Corporation and the general supervision of the its property,
business interests and agents.
3.7.2 The president or the president's designee shall preside at all
meetings of the shareholders and directors, unless otherwise ordered by the
Board of Directors.
3.7.3 The president shall, at the annual meeting of shareholders,
make an annual report on the business and fiscal affairs of the Corporation
and make such recommendations as the president deems proper.
3.8 SECRETARY.
3.8.1 The secretary shall keep or cause to be kept at the principal
office, or such other place as the Board of Directors may order, a book of
minutes of all meetings of directors and shareholders showing the time and
place of the meeting, whether it was a regular or special meeting, and if a
special meeting, how authorized, the notice given, the names of those present
at directors' meetings, the number of shareholders present or represented at
shareholders' meetings and the proceedings at those meetings.
3.8.2 The secretary shall keep or cause to be kept at the registered
office or at the office of the Corporation's transfer agent, a stock transfer
book, or a duplicate stock transfer book, showing the names of the
shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for such shares, and the
number and date of cancellation of certificates surrendered for cancellation.
3.8.3 The secretary shall give or cause to be given notice of the
meetings of the shareholders and of the Board of Directors as is required by
these Bylaws.
3.8.4 The secretary shall perform the duties of the treasurer unless
a treasurer is appointed by the Board of Directors.
3.9 TREASURER.
3.9.1 A treasurer shall perform those duties in connection with the
administration of the financial affairs of the Corporation as the president or
the Board of Directors may designate.
3.9.2 If required by the Board of Directors, the treasurer shall give a
bond for the faithful discharge of the treasurer's duties in such sums and
with such security or surety as the Board of Directors shall determine.
3.10 VICE PRESIDENT. Each vice president, if any, shall perform the
duties that the president or the Board of Directors prescribe. The vice
president or, if there is more than one vice president, the vice president
designated by the president shall have the same powers as the president in the
absence of the president or during the president's disability or inability to
act.
ARTICLE 4. CORPORATE RECORDS - INSPECTION
4.1 MAINTENANCE OF RECORDS. The Corporation shall maintain adequate and
correct books, records and accounts of its business and properties. Except as
otherwise provided by law, all of these books, records and accounts shall be
kept at its principal office.
4.2 INSPECTION OF BOOKS AND RECORDS. A shareholder of the Corporation,
including the beneficial owner of shares held in a voting trust, is entitled
to inspect and copy, during regular business hours at a reasonable location
specified by the Corporation, all books, records and accounts of the
Corporation if the shareholder gives the Corporation written notice of the
shareholder's demand at least five business days before the date on which the
shareholder wishes to inspect and copy. The shareholder may inspect and copy
such records only if the shareholder's demand is made in good faith and for a
proper purpose; the shareholder describes with reasonable particularity
the shareholder's purpose and the records the shareholder desires to inspect;
and the records are directly connected with the shareholder's purpose.
4.3 INSPECTION OF BYLAWS AND ARTICLES OF INCORPORATION. A shareholder
of the Corporation is entitled to inspect and copy, during regular business
hours at the Corporation's principal office, the Articles of Incorporation and
all amendments or restatements, the Bylaws and all amendments or restatements
and any resolution adopted by the Board of Directors, if the shareholder gives
the Corporation written notice of the shareholder's demand at least five
business days before the date on which the shareholder wishes to inspect and
copy. The Corporation may impose a reasonable charge covering the costs of
labor and materials for copies of any documents provided to the shareholder.
Such charge may not exceed the estimated cost of production or reproduction of
the records.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES
5.1 INDEMNIFICATION OF DIRECTORS. Unless otherwise provided in the
Articles of Incorporation, the Corporation shall indemnify any individual made
a party to a proceeding because the individual is or was a director of the
Corporation, against liability incurred in the proceeding, but only if the
Corporation has authorized the payment in accordance with ORS 60.404 and a
determination has been made in accordance with the procedures set forth in ORS
60.404 that the director met the standards of conduct in Sections 5.1.1-5.1.3.
5.1.1 STANDARD OF CONDUCT. The individual shall demonstrate that:
(1) The individual conducted himself or herself in good faith; and
(2) The individual reasonably believed that the individual's conduct was
in the best interests of the Corporation, or at least not opposed to its best
interests; and
(3) In the case of any criminal proceeding, the individual had no
reasonable cause to believe his or her conduct was unlawful.
5.1.2 NO INDEMNIFICATION PERMITTED IN CERTAIN CIRCUMSTANCES. The
Corporation shall not indemnify a director under this Section 5.1:
(1) In connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the Corporation; or
(2) In connection with any other proceeding charging improper personal
benefit to the director, whether or not involving action in the director's
official capacity, in which the director was adjudged liable on the basis that
personal benefit was improperly received by the director.
5.1.3 INDEMNIFICATION IN DERIVATIVE ACTIONS LIMITED. Indemnification
permitted under this Section 5.1 in connection with a proceeding by or in the
right of the Corporation is limited to reasonable expenses incurred in
connection with the proceeding.
5.1.4 MANDATORY INDEMNIFICATION. In addition, unless limited by the
Articles of Incorporation, the Corporation shall indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the director was a party because of being a director of
the Corporation against reasonable expenses incurred by the director in
connection with the proceeding.
5.2 ADVANCE FOR EXPENSES OF DIRECTORS. Unless otherwise provided in the
Articles of Incorporation, the Corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding, if:
5.2.1 The director furnishes the Corporation a written affirmation of
the director's good faith belief that the director has met the standard of
conduct described in Section 5.1;
5.2.2 The director furnishes the Corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct
(which undertaking must be an unlimited general obligation of the director but
need not be secured and may be accepted without reference to financial ability
to make repayment); and
5.2.3 A determination is made that the facts then known to those
making the determination would not preclude indemnification under Section 5.1
or ORS 60.387-60.414.
5.3 INDEMNIFICATION OF OFFICERS, AGENTS, AND EMPLOYEES WHO ARE NOT
DIRECTORS. Unless otherwise provided in the Articles of Incorporation, the
Board of Directors may indemnify and advance expenses to any officer,
employee, or agent of the Corporation, who is not a director of the
Corporation, to any extent consistent with public policy, as determined by the
general or specific action of the Board of Directors.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES.
6.1.1 Certificates for shares shall be in such form as the Board of
Directors may determine. In addition to any requirements of law, each
certificate for shares shall state the following upon its face:
(1) The name of the Corporation and that it is organized under the laws
of Oregon;
(2) The name of the persons to whom issued;
(3) The number and class of shares and the designation of the series, if
any, which the certificate represents;
(4) The number of the certificate and its date of issuance.
6.1.2 The certificates shall be signed by the president or a vice
president and the secretary or an assistant secretary of the Corporation.
6.2 TRANSFER ON THE BOOKS. Upon surrender to the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Corporation shall issue a
new certificate to the person entitled to that certificate, cancel the old
certificate and record the transaction upon its stock transfer books.
6.3 LOST, STOLEN OR DESTROYED CERTIFICATES. If a new certificate is
represented to be lost, stolen or destroyed, a new certificate shall be issued
in place of that certificate upon such proof of the loss, theft or destruction
and upon the giving of a bond or other security as may be required by the
Board of Directors.
6.4 RECORD DATE. The Board of Directors shall fix the record date to
determine shareholders entitled to notice of a meeting to vote at a meeting or
take any other action. Such record date shall not be more than 70 days before
the meeting or action requiring a determination of shareholders.
ARTICLE 7. GENERAL PROVISIONS
7.1 DISTRIBUTIONS. The Board of Directors may authorize, and the
Corporation may make, distributions (including dividends on its outstanding
shares) in the manner and on the terms and conditions provided by law and in
the Corporation's Articles of Incorporation.
7.2 CORPORATE SEAL. The Board of Directors may provide a corporate seal
which may be circular in form and have inscribed thereon any designation
including the name of the Corporation, Oregon as the state of incorporation,
and the words "Corporate Seal."
7.3 AMENDMENTS. The Corporation's Board of Directors may amend or
repeal the Corporation's Bylaws unless:
7.3.1 The Articles of Incorporation or the Oregon Business
Corporation Act reserves this power exclusively to the shareholders in whole
or part; or
7.3.2 The shareholders in adopting, amending, or repealing a particular
Bylaw provide expressly that the Board of Directors may not amend or repeal
that Bylaw.
Adopted this 20th day of January, 1998.
/s/ Thomas W. Palmer
---------------------------
THOMAS W. PALMER, President
<PAGE>
EXHIBIT 4(a)
Certificate Number: ____________ Principal Amount:________________
Date of Maturity: ______________ Interest Rate: __________________
CREDIT CONCEPTS, Inc.
SHORT-TERM INVESTMENT CERTIFICATE
This is to certify that Credit Concepts, Inc., an Oregon corporation (the
"Company") promises to pay to _______________________________________________,
or assigns ("Holder") the sum of ___________________________ thousand and
no/100 dollars ($___,000.00) at the principal offices of the Company on
_______________________ ("Date of Maturity"), which is two (2) years from the
date hereof. This Investment Certificate shall bear simple interest at the
rate of eight percent (8%). Interest on this Investment Certificate shall be
paid and mailed to the Holder's address as registered on the books of the
Company, within five days following the end of each fiscal quarter of the
Company. By written notice to the Company, accompanied by delivery of the
original of this Certificate, the Holder may accelerate the Date of Maturity to
the ninetieth (90th) day following the date of the Company's receipt of the
notice and Certificate, but in such event no interest will accrue between the
date of receipt of the notice and the Date of Maturity as so accelerated.
Although this Investment Certificate is not a negotiable instrument, this
Investment Certificate may be assigned but only through use of the form of
assignment appearing on the reverse side of this Investment Certificate. In
the event of assignment, the assignee should submit this Certificate to the
Company so that it may be registered in the name of the assignee on the
Company's books and the assignee will become the Holder of record entitled to
interest payments paid after that date. If interest is not timely paid within
ten days of the payment date, the entire sum of principal and interest shall,
at the option of the Holder, become immediately due and payable without notice.
In the event the Holder is required to institute collection proceedings on this
Investment Certificate, the Company shall pay all costs thereof, including
reasonable attorneys fees. On the Date of Maturity the Holder must present
this Certificate to the Company for payment, as interest on this Certificate
ceases to accrue after that date. PAYMENT OF PRINCIPAL AND INTEREST DUE UNDER
THIS INVESTMENT CERTIFICATE IS EXPRESSLY SUBORDINATE AND JUNIOR TO THE RIGHTS
OF ANY ONE OR MORE COMMERCIAL BANKS WHICH, NOW OR IN THE FUTURE, MAKE A LOAN OR
OTHERWISE EXTEND CREDIT TO THE COMPANY. THE BANK INDEBTEDNESS WILL BE SECURED
BY A SECURITY INTEREST IN ALL OF THE COMPANY'S CONTRACTS, RECEIVABLES AND THEIR
PROCEEDS. IN THE ABSENCE OF A DEFAULT IN THE COMPANY'S OBLIGATIONS TO SUCH
BANKS, PRINCIPAL AND INTEREST PAYMENTS MAY BE MADE TO THE HOLDER OF THIS
CERTIFICATE. HOWEVER, IN THE EVENT THE COMPANY DEFAULTS IN ITS OBLIGATIONS
OWED TO THE BANK(S), NO PRINCIPAL OR INTEREST PAYMENTS PAID OR FALLING DUE
UNDER THIS CERTIFICATE AFTER THAT DATE MAY BE MADE BY THE COMPANY OR RETAINED
BY THE HOLDER UNTIL ALL OBLIGATIONS TO THE BANK(S) HAVE BEEN PAID IN FULL. NO
PAYMENT SHALL BE REQUIRED UNDER THIS CERTIFICATE IF THE PAYMENT WOULD CAUSE AN
EVENT OF DEFAULT UNDER THE COMPANY'S OBLIGATIONS TO THE BANK(S). IN THE EVENT
OF A BANKRUPTCY BY THE COMPANY, THE BANK(S) SHALL BE ENTITLED TO FILE AND VOTE
THE CLAIMS OF THE HOLDERS OF THESE CERTIFICATES.
IN WITNESS WHEREOF, the Company has caused this Investment Certificate to
be signed below by its duly authorized officers as of this ___ day of
_______________, 199__.
____________________________ (Corporate Seal) ____________________________
(Tom W. Palmer) President (Eugene C. Albert) Secretary
<PAGE>
EXHIBIT 4(b)
Certificate Number: ____________ Principal Amount:______________
Date of Maturity: ______________ Interest Rate: __________________
CREDIT CONCEPTS, Inc.
LONG-TERM INVESTMENT CERTIFICATE
This is to certify that Credit Concepts, Inc., an Oregon corporation (the
"Company") promises to pay to _______________________________________________,
or assigns ("Holder") the sum of ___________________________ thousand and
no/100 dollars ($___,000.00) at the principal offices of the Company on
_______________________ ("Date of Maturity"), which is four (4) years from the
date hereof. This Investment Certificate shall bear simple interest at the
rate of eight and three-quarters percent (8.75%). Interest on this Investment
Certificate shall be paid and mailed to the Holder's address as registered on
the books of the Company, within five days following the end of each fiscal
quarter of the Company. By written notice to the Company, accompanied by
delivery of the original of this Certificate, the Holder may accelerate the
Date of Maturity to the ninetieth (90th) day following the date of the
Company's receipt of the notice and Certificate, but in such event no interest
will accrue between the date of receipt of the notice and the Date of Maturity
as so accelerated. Although this Investment Certificate is not a negotiable
instrument, this Investment Certificate may be assigned but only through use of
the form of assignment appearing on the reverse side of this Investment
Certificate. In the event of assignment, the assignee should submit this
Certificate to the Company so that it may be registered in the name of the
assignee on the Company's books and the assignee will become the Holder of
record entitled to interest payments paid after that date. If interest is not
timely paid within ten days of the payment date, the entire sum of principal
and interest shall, at the option of the Holder, become immediately due and
payable without notice. In the event the Holder is required to institute
collection proceedings on this Investment Certificate, the Company shall pay
all costs thereof, including reasonable attorneys fees. On the Date of
Maturity the Holder must present this Certificate to the Company for payment,
as interest on this Certificate ceases to accrue after that date. PAYMENT OF
PRINCIPAL AND INTEREST DUE UNDER THIS INVESTMENT CERTIFICATE IS EXPRESSLY
SUBORDINATE AND JUNIOR TO THE RIGHTS OF ANY ONE OR MORE COMMERCIAL BANKS WHICH,
NOW OR IN THE FUTURE, MAKE A LOAN OR OTHERWISE EXTEND CREDIT TO THE COMPANY.
THE BANK INDEBTEDNESS WILL BE SECURED BY A SECURITY INTEREST IN ALL OF THE
COMPANY'S CONTRACTS, RECEIVABLES AND THEIR PROCEEDS. IN THE ABSENCE OF A
DEFAULT IN THE COMPANY'S OBLIGATIONS TO SUCH BANKS, PRINCIPAL AND INTEREST
PAYMENTS MAY BE MADE TO THE HOLDER OF THIS CERTIFICATE. HOWEVER, IN THE EVENT
THE COMPANY DEFAULTS IN ITS OBLIGATIONS OWED TO THE BANK(S), NO PRINCIPAL OR
INTEREST PAYMENTS PAID OR FALLING DUE UNDER THIS CERTIFICATE AFTER THAT DATE
MAY BE MADE BY THE COMPANY OR RETAINED BY THE HOLDER UNTIL ALL OBLIGATIONS TO
THE BANK(S) HAVE BEEN PAID IN FULL. NO PAYMENT SHALL BE REQUIRED UNDER THIS
CERTIFICATE IF THE PAYMENT WOULD CAUSE AN EVENT OF DEFAULT UNDER THE COMPANY'S
OBLIGATIONS TO THE BANK(S). IN THE EVENT OF A BANKRUPTCY BY THE COMPANY, THE
BANK(S) SHALL BE ENTITLED TO FILE AND VOTE THE CLAIMS OF THE HOLDERS OF THESE
CERTIFICATES.
IN WITNESS WHEREOF, the Company has caused this Investment Certificate to
be signed below by its duly authorized officers as of this ___ day of
_______________, 199__.
____________________________ (Corporate Seal) ____________________________
(Tom W. Palmer) President (Eugene C. Albert) Secretary
<PAGE>
EXHIBIT 10(a)
MASTER DEALER AGREEMENT
DATE: _____________________________
PARTIES: CREDIT CONCEPTS, INC.,
an Oregon corporation
2149 Centennial Plaza, Ste 2
Eugene, OR 97401 ("Company")
_____________________________
_____________________________
_____________________________ ("Dealer")
AGREEMENTS:
IN CONSIDERATION, of the mutual promises of the parties, Company and
Dealer hereby agree as follows:
SECTION 1. SALES AND PURCHASES
1.1 Dealer shall, from time to time, sell, transfer, and assign to
Company, in accordance with this Agreement, chattel paper (hereafter
"Contracts") including, but not limited to, purchase money security agreements
and/or retail installment contracts as Company, in its sole discretion, shall
elect to purchase. The Contracts will arise from the credit sale by Dealer of
motor vehicles, accessories, service contracts, credit life and disability
insurance, and related items.
1.2 Dealer agrees that all Contracts shall be executed only on forms
approved by Company.
1.3 Company shall have the right, at all times, to refuse to purchase any
and all Contracts offered for sale by Dealer.
1.4 Company may offer to purchase any Contract offered on a "without
recourse", "with recourse" or "limited recourse" basis. The form of assignment
on the Contract shall govern the terms of recourse. The term "with recourse"
means that the assignment to Company is conditioned on the Purchaser's complete
performance of every duty imposed under the Contract and that the risk of loss
remains with Dealer until the Purchaser completes performance of the Contract.
If the Purchaser does not completely perform a Contract assigned on a "with
recourse" basis at any time, Company may require Dealer to repurchase the
Contract for the amount then owing. The term "without recourse" means that the
assignment to Company is not conditioned on the Purchaser's performance of the
Contract and that the risk of loss on the Contract rests with Company, except
as otherwise provided in this Agreement and in the warranty terms of the
Contract. The term "limited recourse" means that the assignment to Company is
conditioned on the Purchaser's performance of the Contract for the time and/or
on the terms indicated in the assignment section of the Contract. If the
Purchaser fails to perform a Contract on a "limited recourse" basis for the
time and/or on the terms indicated in the assignment section of the Contract,
Company at any time may require Dealer to repurchase the Contract for the
amount then owing. After the Purchaser has met the terms indicated in the
assignment section of the Contract, an assignment on a "limited recourse" basis
shall be treated as an assignment on a "without recourse" basis.
Notwithstanding any provision of this Agreement, or any assigned Contract to
the contrary, the warranty and breach provisions of this Agreement and the
assigned Contract shall control over the terms of assignment.
1.5 Dealer agrees to execute properly the assignment and warranty section
on the Contracts assigned to Company. If Dealer fails to execute the
assignment form, Company may still purchase the Contract, endorse Dealer's name
thereon, and designate whether the Contract is purchased on a full or limited
recourse or nonrecourse basis. Company's right to refuse to purchase any or
all Contracts on any basis may be exercised by Company at any time
notwithstanding any past course of conduct between Dealer and Company.
1.6 When Company purchases a Contract from Dealer, Dealer shall deliver,
or cause to be delivered, to Company:
1.6.1 The Contract, with the appropriate assignment and endorsement of
the Contract;
1.6.2 The certificate of title covering the Vehicle showing Company as
sole lienholder of the Vehicle and the Purchaser as the registered owner of the
Vehicle if the Vehicle is subject to a certificate of title, or such other
evidence of a perfected security interest required by Company if the Vehicle or
property is not subject to a certificate of title; and
1.6.3 The insurance policies covering the Vehicle written by insurance
companies approved by the Company.
1.7 If Company purchases any Contract on any basis before all of the
documents described in the foregoing paragraph are received by Company, Dealer
unconditionally guarantees full payment of all debts and obligations owed under
each such Contract until the required documentation is complete in the files of
the Company. After all required documentation is complete, Dealer's
obligations shall be as set forth in this Agreement and the Contracts assigned.
1.8 When Company purchases a Contract from Dealer, Company shall pay
Dealer the amount financed as shown on the face of the Contract plus any
insurance financed through Dealer, or any other price to which Dealer and
Company agree in writing ("Purchase Price"). Company and Dealer may, from time
to time, agree upon a nonrefundable reserve to be retained by Company in
connection with the Contracts. The Purchase Price less any nonrefundable
reserve shall be paid by Company to Dealer in cash. Full title to the Contract
passes to Company upon payment. Dealer agrees to provide reasonable assistance
to Company with respect to collection of the amounts due Company on assigned
Contracts upon Company's request, including, but not limited to, locating and
contacting Purchaser and assisting in repossession of any security.
1.9 If any payments are made to Dealer on any Contract sold to Company,
Dealer will hold such funds in trust for Company without commingling the funds
with funds of Dealer and will promptly deliver the funds to Company. Company
is irrevocably authorized to negotiate and to endorse the name of Dealer on any
remittance offered as payment on any Contract sold to Company and to retain the
proceeds thereof as payment on such Contract. Dealer further appoints Company
as its attorney-in-fact to negotiate and present for payment any check or item
received as payment of Purchaser's obligation under the assigned Contract. If
any Vehicle described in any Contract sold to Company shall come into the
possession of Dealer, while Purchaser is in default under the Contract, and
Company is entitled to possession of the Vehicle, Dealer shall promptly notify
Company, shall hold the Vehicle for the benefit of Company and exercise the
same degree of care over the Vehicle as Dealer exercises with regard to
Dealer's inventory, and shall deliver the Vehicle to Company on demand.
1.10 Dealer hereby agrees to indemnify and hold harmless Company against
any and all actions or claims, or any liabilities therefrom, by Purchaser or
any other party which may arise from or in connection with any Contract
purchased under this Agreement, including, but not limited to, Company's
attorney fees and interest losses incurred as a result of or arising out of
any claim or defense that could be asserted against Dealer, regardless of
whether such claims or defense is related to the condition of the property sold
or the quality of services provided, whether it existed at the time of the sale
of Contract or arose thereafter, or whether the claim or defense is true or
false or brought in good faith. Dealer further agrees promptly to fulfill all
obligations to Purchaser as required by the Contract, underlying sales
transaction, manufacturer's warranty, or otherwise. The agreement to indemnify
above shall apply to any breach of this Agreement.
1.11 Notwithstanding any provision to the contrary, Dealer
unconditionally guarantees full performance of each Contract sold or to be sold
by Dealer to Company on a no recourse or limited recourse basis when and if
Dealer, without Company's prior written consent, modifies the Contract or makes
any settlement or arrangement with Purchaser contrary to the terms of the
Contract, or if Purchaser fails to make required payments because of any breach
in Dealer's duties under the Contract, any other agreement between Dealer and
Purchaser, or any warranty, expressed or implied.
1.12 For each Contract sold to Company, Dealer waives notice of
acceptance, demand and presentation for payment, notice of nonpayment, protest,
notice of protest, and hereby agrees to each and every renewal or extension
that Company may grant for the payment of any sum due or to become due under
any such Contract. Dealer agrees that Company, in its sole discretion, without
affecting the obligations and liability of Dealer under this Agreement or under
any endorsement or guaranty of Dealer, may grant any renewal, modification, or
extension of any Contract upon whatever terms and conditions as Company deems
advisable.
SECTION 2. WARRANTIES
With respect to each Contract sold or to be sold by Dealer to Company,
Dealer warrants and agrees:
2.1 Dealer has, and will continue to have, legal capacity to enter into
each Contract and assign the same to Company and the Vehicle subject to the
Contract is not subject to any lien, claim, or encumbrance or right of setoff
of any nature.
2.2 Each Purchaser has, and will continue to have, legal capacity to
enter into the Contract executed by the Purchaser and that such Contract is,
and will continue to be, legally enforceable against the Purchaser.
2.3 The credit information provided to Company is true to the best of the
Dealer's knowledge and was obtained by Dealer from the Contract Purchaser or
from third parties with Purchaser's consent.
2.4 Each Contract assigned to Company was made in good faith, was
actually signed by the person or persons named therein as Purchasers,
accurately reflects a genuine transaction between Dealer and Purchaser in all
particulars, and is not in default at the time Company accepts the Contract.
2.5 Dealer has performed all of Dealer's duties under each Contract
transferred to Company.
2.6 Before closing and in connection with each sale, Dealer will comply
with all requirements of applicable state and federal laws or regulations,
including but not limited to:
2.6.1 Federal Consumer Protection Act and all amendments
thereto, including:
2.6.2 Truth in Lending Act;
2.6.3 Equal Credit Opportunity Act;
2.6.4 Regulations Z and B, respectively, as promulgated by
the Federal Reserve Board;
2.6.5 Fair Credit Reporting Act;
2.6.6 Applicable State Credit Codes and Uniform Consumer
Credit Codes;
2.6.7 Regulations of the Federal Trade Commission;
2.6.8 Uniform Commercial Code; and
2.6.9 All other applicable laws and regulations.
2.7 The downpayment on each Contract has been actually received by Dealer
in the form of cash or fair trade allowance, rebate, or combination of the
foregoing, and will not be represented by, nor consist of, Purchaser's deferred
obligations of any kind whatsoever.
2.8 Any financial statements Dealer has provided to Company accurately
reflect Dealer's financial condition at the time each such statement was
provided and there have been no adverse material changes in Dealer's financial
condition since the giving of such statement, except those disclosed to Company
in writing.
2.9 Dealer has taken all steps required to or will apply for and obtain a
proper certificate of title for the Vehicle, showing Purchaser as registered
owner and Company as legal owner and first lienholder of the Vehicle, or
otherwise reflect a perfected security interest in favor of Company before or
within twenty (20) days after Purchaser takes possession of the Vehicle.
2.10 Any person who has an ownership interest in the Vehicle has signed
the Contract as Purchaser or other owner.
2.11 Purchaser has not obtained any right in, or possession of, the
Vehicle by fraud or any other unlawful scheme, trick, or device.
2.12 Purchaser has accepted the goods and services described in the
Contract and has communicated no dissatisfaction with such goods and services
to Dealer.
2.13 The Vehicle is not to be used as a taxi or for hire and is not to be
rented or leased.
2.14 There are no defenses to the Contract assigned to Company.
2.15 Dealer will pay to Company promptly any payments received from the
Purchaser under the Contract.
2.16 Dealer has verified the placement of replacement cost insurance
insuring the property subject to the Retail Installment Contract against
casualty with such policies issued by companies and in form and substance
satisfactory to Company, and Dealer has taken all steps necessary to make
Company a loss payee or additional insured under such policies.
2.17 Dealer is not self-insuring obligations under any service or
maintenance contract written in connection with the sale of any Vehicle and
financed in the Contract.
2.18 The statements in this Dealer Agreement are true and are offered for
the purpose of inducing Company to purchase Contracts under this Agreement.
SECTION 3. DEFAULT
Each of the following shall constitute an event of default under this
Agreement:
3.1 Failure of Dealer to comply with or to perform any provision of this
Agreement, or any other agreement between Dealer and Company. If such failure
is curable, without prejudice to the rights of Company, and if Dealer has not
been given a prior notice of breach of the same provision of the applicable
agreement, it may be cured (and no event of default shall have occurred) if
Dealer, after receiving written notice from Company demanding cure of such
failure:
3.1.1 Cures the default within ten (10) days; or
3.1.2 If the cure requires more than ten (10) days, immediately initiates
steps sufficient to cure the default and therefore continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
3.2 Any representation, warranty, promise, guaranty, agreement, or
statement by Dealer to Company under this Agreement, any contract assigned to
Company, or any other agreement between Dealer and Company, is breached or is
at the time made or furnished was false or misleading in any manner or respect.
3.3 Dealer misrepresents to Company the amount or form of the down
payment received from the Purchaser in any Contract assigned to Company.
3.4 Dissolution or termination of Dealer's existence as a going business,
death or incompetency of Dealer, insolvency of Dealer, appointment of a
receiver for any part of Dealer's property, any assignment by Dealer for the
benefit of creditors, or the commencement of any proceeding under bankruptcy or
insolvency laws by or against Dealer.
3.5 Commencement of foreclosure, whether by judicial proceeding, self-
help repossession, or any other method, by any creditor of Dealer against any
of Dealer's assets. This subsection shall not apply in the event of a good
faith dispute by Dealer as to the validity or reasonableness of the claim which
is the basis of the foreclosure, provided Dealer gives Company written notice
of such claim and finishes adequate reserves for the claim.
3.6 Failure of Purchaser to pay the initial payment due on the Contract
within fifteen (15) days of the due date.
SECTION 4. REMEDIES
4.1 If any event of default described above shall occur, Dealer shall
promptly reimburse Company for any expenses related to the default and Dealer
shall immediately repurchase the Contract(s) subject to the default for an
amount equal to the unpaid principal balance and accrued interest owing on the
Contract, plus any costs and expenses incurred by Company as a result of the
event of default. Dealer's obligations in this paragraph shall arise
automatically without any requirement that Company repossess the Vehicle or
that the Contract otherwise be in default. In addition, upon any event of
default, without notice of any kind to Dealer, all amounts owing from Dealer to
Company shall become immediately due and payable upon the option of Company,
except for an event of default described in 3.1.4 above, in which case
acceleration shall be automatic and not optional. Company may proceed to
exercise its legal rights in such manner as it may elect, including, but not
limited to, any rights specified in this Agreement. Company may have a
receiver appointed as a matter of right. The receiver may be an employee of
Company and may serve without bond. Company may hold all of Dealer's accounts
with Company, and may apply the funds in these accounts to pay all or part of
any obligations, direct or contingent, owing from Dealer to Company. In
addition, Company shall have and may 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, with regard to any collateral securing
Dealer's obligation to Company.
4.2 All sums owed by Dealer to Company under this Agreement, shall bear
interest at the rate of thirteen and one-half percent (132%) per annum.
SECTION 5. GENERAL PROVISIONS
5.1 Dealer agrees to furnish such financial information and statements,
lists of assets and liabilities, budgets, forecasts, and other reports with
respect to Dealer's financial condition and business operations as Company may
request from time to time.
5.2 Notwithstanding anything in this Agreement or any Contract to the
contrary, if Company purchases any Contract on any basis which contains a
pickup or a balloon payment provision, Dealer agrees that such Contract shall
be treated as a Contract purchase on a full recourse basis until such time as
the pickup payment or balloon payment is paid by Purchaser.
5.3 If Company suffers any loss on any purchased Contract as a result of
a repossession, or if any insurance written with respect to the Purchaser,
Vehicle, or Contract is cancelled for any reason, Dealer agrees to pay Company
all unearned insurance premiums paid to Dealer, including, but not limited to,
warranty, property, mechanical breakdown, credit life, and credit disability
insurance. Dealer further agrees to pay Company all commissions unearned by
Dealer as a result of the sale of any
insurance that is related to the Purchaser, Vehicle, or Contract, if and when
that insurance is cancelled by the Purchaser.
5.4 If any provision of this Agreement is held to be invalid, illegal, or
unenforceable by any court, the remaining provisions of this Agreement shall
nevertheless be binding, and this Agreement shall be enforceable as if the void
or unenforceable provision or provisions hereof had not been included in this
Agreement.
5.5 An express waiver by Company of an event of default will not
constitute a waiver of Company's right to declare a default under similar or
identical circumstances.
5.6 No amendment, modification, wavier, or consent with respect to any
provision of this Agreement by Company shall be effective unless it is in
writing and signed and delivered by Company to Dealer, and then any such
amendment, modification, waiver, or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.
5.7 The rights and liabilities of the Company and Dealer as set forth in
this Agreement are in addition to those set forth, or which will be set forth,
in the written Contracts, written assignments, or related documents which
Dealer may sell, transfer, assign, or deliver to Company under this Agreement.
5.8 This Agreement may be terminated at any time by either party upon
notice to the other, provided, however, that such termination shall not affect
Dealer's direct or contingent obligations or Company's rights with respect to
any Contract purchased under this Agreement and held by Company.
5.9 All notices to be given by either party to the other under this
Agreement shall be in writing and shall be effective when actually delivered or
when deposited in the United States mail, first class postage prepaid,
addressed to the other 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. For notice purposes, Dealer agrees to keep Company informed
at all times of Dealer's current address.
5.10 Company may pay someone else to enforce this Agreement and Dealer
will pay that amount. This includes, subject to any limits under applicable
law, Company's attorney fees and legal expenses, whether or not there is a
lawsuit, including attorney fees for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated postjudgment collection services. Dealer also will
pay any court costs, in addition to all other sums provided by law.
5.11 If there is more than one Dealer under this Agreement or on any
Contract, all obligations of such Dealers shall be joint and several.
5.12 This Agreement, read in conjunction with each Contract assigned to
Company, shall be the entire agreement of the parties and shall be binding upon
Dealer and Company and their respective heirs, successors and assigns, and
shall inure to the benefit of Dealer and Company and the successors and assigns
of Company.
5.13 Dealer agrees that venue for any legal action arising from this
Agreement is in Lane County, Oregon, and this Agreement shall be governed by
and construed in accordance with the laws of the State of Oregon.
COMPANY: DEALER:
CREDIT CONCEPTS, INC. _____________________________
an Oregon corporation
By:____________________________ By:_____________________________
Title Title
<PAGE>
AMENDMENT TO MASTER DEALER AGREEMENT
DATE:
PARTIES: CREDIT CONCEPTS, INC.,
an Oregon corporation
2149 Centennial Plaza, Ste 2
Eugene, OR 97401 ("Company")
_____________________________
_____________________________
_____________________________ ("Dealer")
RECITALS:
A. On or about________________________, Company and Dealer entered into a
Master Dealer Agreement; and
B. It is the mutual desire of Company and Dealer to amend the Master
Dealer Agreement as more particularly set forth hereafter.
AMENDMENTS:
Section 3 is hereby amended by adding a new Section 3.6, as follows:
"3.6 Failure of Purchaser to pay the initial
payment due on the Contract within fifteen (15) days of
the due date."
Company and Dealer hereby ratify and confirm all remaining terms and
provisions of the Master Dealer Agreement.
COMPANY: DEALER:
CREDIT CONCEPTS, INC., ______________________________
an Oregon Corporation
By:___________________________ By: __________________________
Title Title
<PAGE>
EXHIBIT 10(b)
RETAIL INSTALLMENT CONTRACT
- ------------------------------------------------------------------------------
Dealer Number Contract Number Date
- ------------------------------------------------------------------------------
|
Buyer (and Co-Buyer)-Name and Address | Creditor/Seller-Name and Address
(Include County and Zip Code) |
|
- ------------------------------------------------------------------------------
By signing this contract, I am buying the Property described below from you,
the Creditor/Seller indicated above, and I agree to the terms stated on the
front and back of this contract, including those stated in the Federal Truth-In-
Lending Disclosures.
SECURITY INTEREST. By signing this contract, I grant to you a security
interest in the "Property", which is the vehicle described below and all
presently owned and after-acquired accessions now or later attached to it, and
in any insurance premiums financed by this contract which are refunded, to
secure payment of all amounts owed under this contract.
IF THE PROPERTY IS A USED VEHICLE: THE INFORMATION I SEE ON THE WINDOW FORM FOR
THIS VEHICLE IS PART OF THIS CONTRACT. INFORMATION ON THE WINDOW FORM
OVERRIDES ANY CONTRARY PROVISIONS IN THE CONTRACT OF SALE.
<PAGE>
<TABLE>
<CAPTION>
Model Yr. Make & Model Body Type Color Odometer Vehicle Iden- St. & Lic. No. New/Used No. Cyls
tification No.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Describe body and major Use for which purchased:
items of equipment sold: [ ]Personal [ ]Commercial [ ] Agricultural
<S> <C> <C> <C> <C> <C>
[ ]Auto Trans. [ ]Pwr. Steer [ ]Air Cond. [ ]AM/FM Stereo [ ]Cassette
[ ] Compact Disc [ ]Pwr. Windows [ ]Pwr. Locks [ ]Pwr. Seats [ ]Tilt Wheel [ ]Cruise
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INSURANCE AND PROTECTION. If any insurance or protection is checked below, the
policies or certificates issued by the Companies named will describe the terms
and conditions.
- ------------------------------------------------------------------------------
OPTIONAL INSURANCE. Credit life insurance, credit disability insurance and
other optional insurance are not required to obtain credit and will not be
provided unless I sign for them and agree to pay the additional cost. If I
have chosen this insurance, the cost is shown in 4a of the itemization below.
Credit life insurance is based upon the payment schedule and the term of this
contract. This insurance may not pay all I owe on this contract if I make late
payments. Disability insurance covers the original payment amount for the term
of this contract. If I make late payments, disability insurance will not pay
all of my payments. The amount and coverages are shown in a notice or
agreement given on this date.
<PAGE>
<TABLE>
<S> <C> <C> <C>
[ ]Credit Life (Buyer)[ ] Co-Buyer[ ] Both[ ]) Insurer__________ Insured(s)___________
[ ]Credit Disability, Accident and Health (Buyer only) Insurer__________ Insured______________
[ ](Type of Other Insurance)_________________________ Insurer__________ Insured______________ Term________
</TABLE>
Under policy of designated Insurance Company(ies), maximum amount of insurance
under this contract is $___________, and the total amount of insurance under
this and any other installment contract of the Buyer is limited to $_________.
I want the insurance coverage(s) checked above, and I know that it is not
required to obtain credit:
__________________________________ _____________________________________
Buyer Signature Date Co-Buyer Signature Date
- ------------------------------------------------------------------------------
REQUIRED PHYSICAL DAMAGE INSURANCE. Physical damage insurance is required, but
I may obtain it from anyone I choose. If purchase through you from the
Insurance Company named below, the cost of this insurance, for the term shown
immediately below, is shown in 4b of the itemization below.
Insurance Company __________________________ Term:_____________ months
[ ] $__________ Deductible Collision and either:
[ ] Full Comprehensive including Fire, Theft and Combined
Additional Coverage
[ ] $__________ Deductible Comprehensive including Fire, Theft and
Combined Additional Coverage.
[ ] Fire, Theft and Combined Additional Coverage
Optional, if desired - [ ]Towing and Labor costs [ ]Rental Reimbursement
[ ]CB Radio Equipment
- ------------------------------------------------------------------------------
OPTIONAL SERVICE CONTRACT. The cost of this contract is shown in 4c of the
Itemization below.
Company____________________________ Term:_________ $________ Deductible
OPTIONAL MECHANICAL BREAKDOWN PROTECTION. The cost of this protection is shown
in 4d of the Itemization below.
Company____________________________ Term:_________ $________ Deductible
- ------------------------------------------------------------------------------
WARNING: THE INSURANCE OR PROTECTION REFERRED TO IN THIS CONTRACT DOES NOT
INCLUDE COVERAGE FOR PUBLIC LIABILITY, BODILY INJURY, OR PROPERTY DAMAGE (OTHER
THAN THE VEHICLE NOTED ABOVE) CAUSED TO BUYER OR OTHERS.
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
ITEMIZATION OF AMOUNT FINANCED
<S> <C> <C>
1. Cash Sale Price (including any accessories).......................................... $_________(1)
2. Downpayment:
a. Cash Downpayment (including Manufacturer's Rebate of
$_________, if applicable)......................................... $_________
b. Deferred Downpayment (Pickup Pymt), due _______, on which there's
no finance charge, of ............................................ $_________
c. Trade-in: Value $__________ Less owing $_________ Net............. $_________
Description of Trade-in:_____________________________________
Total Downpayment (a+b+c) (also put this figure on the downpayment line
in the Total Sale Price box below) ..................................................... $_________(2)
3. Unpaid Balance of Cash Sale Price
(Amount Given to Me Directly) (1 minus 2)............................................ $_________(3)
4. Charges other than Finance Charge, including Amounts Paid to Others
on My Behalf: (*Seller may be retaining a portion of this amount)
a. Cost of Optional Insurance for the Term of this Contract paid to
the Insurance Company(ies) named above.*
Credit Life $_____________ Credit Disability, Accident and
Health $_______ Other $__________ .............................. $_________
b. Cost of required Physical Damage Insurance paid to the Insurance
Company named above (covers damage to vehicle)*.................. $_________
c. Cost of Optional Service Contract paid to the Company named above
(covers certain repairs)*........................................ $_________
d. Cost of Optional Mechanical Breakdown Protection paid to the
Company named above (covers certain repairs)*.................... $_________
e. License/Registration Fees paid to government agencies............ $_________
f. Title Fees paid to government agencies........................... $_________
g. Filing Fees paid to government agencies.......................... $_________
h. Excise tax paid to government agencies........................... $_________
i. Sales tax paid to government agencies............................ $_________
j. Other Charges (Seller must identify who will receive payment
and describe purpose)*........................................... $_________
to______________________________ for___________________________ $_________
to______________________________ for___________________________ $_________
Total Other Charges and Amounts Paid to Others on
My Behalf.......................................................................... $_________(4)
5. Amount Financed Principal Balance (3+4) (also put this figure in
the Amount Financed box below)....................................................... $_________(5)
6. Finance Charge (also put this figure in the FINANCE CHARGE box
below)............................................................................... $_________(6)
7. Time Balance (5+6+2b) (also put this figure in the Total of Payments
box below)........................................................................... $_________(7)
8. Time Sale Price (1+4+6) (also put this figure in the Total Sale Price
box below)........................................................................... $_________(8)
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
FEDERAL TRUTH-IN-LENDING DISCLOSURES
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ANNUAL PERCENTAGE RATE FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS TOTAL SALE PRICE
The cost of my credit The dollar The amount of The amount I will The total cost
as a yearly rate. amount the credit credit provided have paid after of my purchase
will cost me. to me or on I have made all on credit, includ-
my behalf. payments as ing my down-payment
scheduled. of $________ is
<S> <C> <C> <C> <C>
___________________% $______________E* $________________ $________________E* $______________E*
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
My Payment Schedule will be:
<TABLE>
<CAPTION>
-------------------------------------------------------
NUMBER AMOUNT
OF PAYMENTS OF PAYMENTS WHEN PAYMENTS ARE DUE
----------- ----------- ---------------------
<S> <C> <C>
Due On
Monthly Beginning
Due On
-------------------------------------------------------
</TABLE>
SECURITY. I am giving a security interest in the goods or property being
purchase.
LATE CHARGE. For each payment that is not paid within 10 days after its
scheduled payment date, I will pay a late charge of 5% of the amount that's
late.
PREPAYMENT. If I pay off early, I will not have to pay a penalty.
See other contract provisions for any additional information about nonpayment,
default and any required repayment in full before the scheduled date.
* E means estimate.
=============================================================================
PAYMENTS AND INTEREST CALCULATION. I will pay you the Total of Payments
according to "My Payment Schedule" shown above. Any payment listed on the
first line of the schedule is a deferred downpayment which does not bear a
Finance Charge. The payments listed on the second line of the schedule are
equal consecutive monthly payments which are due on the same day of each month,
beginning on the date shown. However, the amount of the last payment will be
adjusted to include interest figured on the Principal Balance I owed, for the
time I owed it. I will pay interest on the Principal Balance outstanding each
day at the Annual Percentage Rate. The Total of Payments and Finance Charge
shown above assume I will pay exactly as agreed. If I pay late or less than
the required payment, the Finance Charge is increased. If I pay early or more
than the required payment, the Finance Charge is decreased. Payments will
first pay interest owing to the date you receive my Payment and the remainder
will reduce the Principal Balance I owe.
CONSUMER PAPER
--------------
NOTICE: THE CREDITOR/SELLER INTENDS TO SELL THIS CONTRACT TO (NAME AND MAILING
ADDRESS): ____________________________________________________________
______________________________________________,WHICH IF IT BUYS THE CONTRACT,
WILL BECOME THE OWNER OF THE CONTRACT AND YOUR CREDITOR. AFTER THE SALE OF
THIS CONTRACT, ALL QUESTIONS CONCERNING EITHER TERMS OF THE CONTRACT OR
PAYMENTS SHOULD BE DIRECTED TO THE BUYER OF THE CONTRACT AT THE ADDRESS
INDICATED ABOVE. IF THE CONTRACT IS TRANSFERRED TO A HOLDER OTHER THAN THE ONE
IDENTIFIED IN THIS NOTICE, OR RETAINED BY THE SELLER, SELLER SHALL CAUSE NOTICE
IN WRITING OF THE NAME AND ADDRESS OF THE ACTUAL HOLDER TO BE DELIVERED TO YOU
WITHIN 10 DAYS OF THE DECISION.
NOTICE TO THE BUYER
-------------------
DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT OR IF IT CONTAINS ANY BLANK SPACE,
EXCEPT THAT (1) IF DELIVERY OF THE MOTOR VEHICLE OR MOBILE HOME IS TO BE MADE
TO YOU AFTER THIS CONTRACT IS SIGNED, THE SERIAL NUMBER OR OTHER IDENTIFYING
INFORMATION AND THE DUE DATE OF THE FIRST INSTALLMENT MAY BE FILLED IN AT THE
TIME INSERTED IN THE CONTRACT ON OR ABOUT THE DATE THE NAME OF THE FINANCING
AGENT IS KNOWN.
YOU'RE ENTITLED TO A COPY OF THIS CONTRACT.
YOU HAVE THE RIGHT TO PAY IN ADVANCE THE FULL AMOUNT DUE AND IF YOU DO SO YOU
MAY SAVE A PORTION OF THE FINANCE CHARGE.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS CONTRACT
AND AGREES TO ITS TERMS, INCLUDING THOSE STATED ON THE BACK OF THIS CONTRACT.
RETAIL INSTALLMENT CONTRACT
---------------------------
Buyer Signs_____________________ Co-Buyer Signs________________________
OTHER OWNERS - An Other Owner is a person whose name is on the title to the
vehicle but does not have to pay the debt evidenced by this contract. The
Other Owner hereby grants a security interest in the "Property" (as defined in
this contract) to Creditor to secure payment of all amounts owed under this
contract, and agrees to all the terms stated on the front and back of this
contract, except that the Other Owner will not be personally liable for amounts
owed to Creditor under this contract.
Other Owner signs here________________________ Address________________________
Creditor Signs________________________________ By_______________ Title________
<PAGE>
TERMS AND CONDITIONS
--------------------
NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS
AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR
SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY
HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
THE PRECEDING NOTICE APPLIES ONLY TO GOODS OR SERVICES OBTAINED PRIMARILY FOR
PERSONAL FAMILY OR HOUSEHOLD USE.
1. COLLECTION COSTS. If I don't make any payment when due according to
my payment schedule shown above, I will pay you reasonable amounts permitted by
law which you spend to collect what I owe or in trying to repossess or sell the
Property. I will also pay lawyers' fees, as set by the court, including any
for appeals, that are paid or owed to lawyers who are not your salaried
employees.
2. OWNERSHIP AND RISK OF LOSS. I agree to pay you all I owe under this
contract even if the vehicle is damaged, destroyed or missing. I agree not to
remove the vehicle from the United States or Canada or to sell, rent, lease or
otherwise transfer any interest in the vehicle or this contract without your
written permission. I agree not to expose the vehicle to misuse or
confiscation. I will make sure your security interest (lien) on the vehicle is
shown on the title. If you pay any repair bills, storage bills, taxes, fines,
or other charges on the vehicle, I agree to repay the amount when you ask for
it.
3. SECURITY INTEREST. I am giving you a security interest in the
Property being purchased and any accessories, equipment and replacement parts
installed in the vehicle. The security interest also covers (1) insurance
premiums and charges for service contracts returned to the Creditor (2)
proceeds of any insurance policies or service contract on the vehicle and (3)
proceeds of any insurance policies on my life or health which are financed in
this contract. This secures payment of all amounts I owe on this contract and
any renewal or extension of this contract. It also secures my other agreements
in this contract.
4. INSURANCE, LIENS, AND UPKEEP.
4.1. I'll keep the Property insured by companies acceptable to you
with collision and comprehensive insurance, and any other insurance you may
require. The insurance policies will have your standard loss payable
endorsement and I will deliver the policies to you. No one but you has a
security interest or lien on the Property.
4.2. I'll pay taxes and any debts that might become a lien on the
Property, and will keep it free of security interests and liens, other than
yours.
4.3. I'll also keep the Property in good condition and repair.
4.4. If any of these things agreed to in this Section 4 are not done,
you may do them and charge me for the cost of doing so. I'll pay the cost of
doing these things either on your demand, or as increased future payments or as
an additional payment or payments at the end of the contract, with interest at
the contract rate. Even if you do these things, my failure to do them will be
a default under Section 8, and you may still use other rights you have based on
the default.
4.5 OPTIONAL INSURANCE OR SERVICE CONTRACTS. This contract may
contain charges for optional insurance or service contracts. If the vehicle is
repossessed, I agree that you may claim benefits under these contracts and
terminate them to obtain refunds for unearned charges.
4.6 INSURANCE OR SERVICE CONTRACT CHARGES RETURNED TO YOU. If any
charge for required insurance is returned to you, it may be credited to my
account or used to buy similar insurance or insurance which covers only your
interest in the vehicle. Any refund on optional insurance or service contracts
obtained by you will be credited to my account. I will be notified of what is
done.
WARNING
-------
UNLESS YOU (BUYER) PROVIDE US (CREDITOR/SELLER) WITH EVIDENCE OF THE
INSURANCE COVERAGE AS REQUIRED BY OUR CONTRACT OR LOAN AGREEMENT, WE MAY
PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE
MAY, BUT NEED NOT, ALSO PROTECT YOUR INTEREST. IF THE COLLATERAL BECOMES
DAMAGED, THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM
MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE
THAT YOU HAVE OBTAINED PROPERTY COVERAGE ELSEWHERE.
YOU ARE RESPONSIBLE FRO THE COST OF ANY INSURANCE PURCHASE BY US. THE
COST OF THIS INSURANCE MAY BE ADDED TO YOUR CONTRACT OR LOAN BALANCE. IF THE
COST IS ADDED TO YOUR CONTRACT OR LOAN BALANCE, THE INTEREST RATE ON THE
UNDERLYING CONTRACT OR LOAN WILL APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE
DATE OF COVERAGE MAY BE THE DATE YOUR PRIOR COVERAGE LAPSED OR THE DATE YOU
FAILED TO PROVIDE PROOF OF COVERAGE.
THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE
YOU CAN OBTAIN ON YOUR OWN AND MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE
COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS IMPOSED BY
APPLICABLE LAW.
5. PREFERENCE PAYMENTS. Any monies you pay or rights you give up
because of an asserted preference claim in my bankruptcy will become a part of
the indebtedness owing under this contract and, at your option, will (a) be
payable on demand, (b) be added to the balance of the contract and be
apportioned among and be payable with any installment payments to become due
during the remaining term of the contract, or (c) be payable as an additional
payment or payments at the end of the contract with interest at the contract
rate. Or, in the event of a loss of rights, substitute collateral or
performance may be substituted in your sole discretion.
6. CO-owners or Transfers. If there are any co-owners of the Property,
they are all signing this contract either as a buyer or as an "Other Owner". I
won't sell the Property, lease it, loan it, or give it away.
7. PROTECTING YOUR INTERESTS. I'll do anything that may now or later be
necessary to perfect and continue your security interest in the Property and
I'll pay all filing fees and other fees and costs involved.
8. DEFAULT. It will be a default:
8.1. If any payment on this contract isn't received when it is due;
8.2. If I fail to keep any agreement I have made in this contract;
8.3. If I die or become insolvent or bankrupt;
8.4. If I have given you a false financial statement, or if I haven't
told you the truth about my financial situation, or about my use of the
Property;
8.5. If any creditor tries, by legal process, to take money from any
bank account I have or to take any money or property I may have coming from
you.;
8.6. If any check or other instrument given as a down payment is
dishonored;
8.7. If any trade-in is subject to any lien other than the one shown
on the face of this contract, or the amount owing on it is more than the amount
shown;
8.8. If the Property is sold, leased, loaned, given away, or the
Property is lost, stolen, damaged, destroyed, levied upon, seized or attached.
If you are required to make any payment in order to release the Property from
any levy, seizure or attachment, you may add the amount of such payment to the
principal balance which I then owe.
8.9. If you form a good faith belief that the prospect of my payment
or performance is impaired.
9. YOUR RIGHTS AFTER DEFAULT. After a default you will have the
following rights and may use any one or any combination of them at any time.
9.1. You may declare the entire contract balance immediately due and
payable all at once.
9.2. You may sue for and recover from me the contract balance, and I
will be liable for all reasonable collection costs, including reasonable
lawyers fees, at trail and on appeal, that are paid or owed to lawyers who are
not your salaried employees.
9.3. You may require me to turn the Property over to you at any place
you name that is reasonably convenient for both of us, and I will do it if you
so demand. I agree that the location where I signed this contract is a
reasonably convenient place for me.
9.4. You may take the Property from me without notice. As long as it
does not cause a breach of the peace, you may enter any place where the
Property is located, to take it. You may also take any property that is not
part of the Property, but that happens to be in or on the Property and may hold
such property in safekeeping for its owner for 60 days. If the owner doesn't
claim such property, you may donate it to charity or otherwise dispose of it
without notice in any manner and on any terms you consider appropriate.
9.5 You may sell the Property and pay the amount received over and
above lawful expenses on the debt evidenced by this contract. You will send me
a written notice of sale at least ten days before selling the vehicle. I agree
that there will be reasonable notice of sale if you mail me notice of the
place, time, and date of any public sale, or notice of the date after which a
private sale may be held, ten days in advance of the date. If I do not redeem
the vehicle by the date on the notice, you can sell it. You will use the net
proceeds of the sale to pay all or part of my debt.
To the extent permitted by law, the net proceeds of sale will be
figured this way: Any late charges and any charges for taking, storing,
clearing, advertising, leasing, and/or selling the vehicle and any reasonable
lawyers fees and court costs will be subtracted from the selling price. If I
owe you less than the net proceeds of sale, the difference is owed to me unless
you are required to pay it to someone else. For example, you may be required
to pay a lender who has given me a loan and also taking a security interest in
the vehicle.
If I owe more than the net proceeds of sale and the vehicles is
purchased primarily for personal, family, or household use, I agree to pay you
the difference between the fair market value of the vehicle and the amount I
owe, when you ask for it. However, I will not be required to pay this amount
if the unpaid balance at the time of default is less than $1250.00 and I have
not wrongfully damaged the vehicle. If the unpaid balance at the time of
default is less than $1250.00 and I have wrongfully damaged the vehicle, I will
be liable to you for the amount of the damages.
If I owe more than the net proceeds of sale, and the vehicle is
purchased primarily for business or commercial use, I agree to pay you the
difference between the net proceeds of sale and what I owe when you ask for it.
If I do not pay the amount I owe when asked, I may also be charged
interest at the Annual Percentage Rate applicable to this contract, not to
exceed the highest lawful rate, until I pay all I owe.
9.6. If I purchase the vehicle primarily for personal, family, or
household use and the unpaid balance is less than $1250.00 at the time of my
default, you must elect either to sue me for the entire amount I owe, or take
repossession of the vehicle in accordance with applicable law.
9.7. You will also have the rights of a secured party under the
Oregon Uniform Commercial Code and other laws.
9.8. You may cancel the collision and comprehensive insurance
required by subparagraph 4.1.
10. ASSIGNMENT BY SELLER. You may transfer your rights under this
contract to anyone. If you transfer this contract, the person or entity to
which the contract is assigned will have the security interest and the right to
insist that I perform my agreements under this contract.
11. NO ASSIGNMENT BY CUSTOMER. I will not assign my rights under this
contract or sell the Property without your written consent. Any attempted
assignment without such consent will be void. No assignment or sale will
terminate or change my obligations to you under this contract.
12. WAIVER of Co-obligor's Rights. I irrevocably waive, disclaim and
relinquish all claims against any and all others obligated with me which I have
or would otherwise have by virtue of payment of the contract or any part
thereof, specifically including but not limited to all rights of indemnity,
contribution or exoneration.
13. MULTIPLE CUSTOMERS. If I'm signing this contract with another
person, I'll be jointly and individually obligated to pay the whole contract.
You may require that I pay the whole contract without asking the other person
to pay. I'll pay the contract even if you and the other person repeatedly
agree to renew or extend it for any length of time, revise its terms, or
release the security.
14. PAYMENTS. I will make payment at any address you specify and payment
will not be considered made until received at that address. Any payment of
less than the entire amount then due may be credited on the balance without
waiving of during any existing default.
15. PREPAYMENT. I may prepay the unpaid balance of the Amount Financed
in full or in part at any time without penalty. If I do so, I must pay the
earned and unpaid part of the Finance Charge and all other amounts due up to
the date of payment.
16. CONSUMER PAPER. If the Property is not consumer goods, this contract
is not Consumer Paper and is not subject to Oregon Revised Statute Section
83.820, even though the words "Consumer Paper" are printed on the front of this
contract.
17. WAIVER. I will perform all duties under this contract (including
making payments if I am a buyer) in a timely manner. If you waive your rights
to insist on timely performance of my duties on any one or more occasions, I
agree that I shall not be excused from timely performance of my duties on any
subsequent occasion.
18. CHANGE OF ADDRESS. I'll give you my new address in writing whenever
I move. You may give me any notices by regular mail at the last address I have
given you.
19. CREDIT INFORMATION. You are authorized to check my credit and
employment history and to answer questions and provide credit reporting
agencies with information about your credit experience with me. I authorize
any person or consumer reporting agency to complete and furnish to you any
information it may have or obtain in response to your credit inquiries.
20. TITLE TRANSFER FEE. If I ask you to consent to a change of
registered owner(s) of the Property and you do consent, I agree to pay you a
reasonable fee for arranging the change as well as paying any filing fees or
other fees paid to officials in connection with the change.
21. OREGON LAW APPLIES. This contract will be governed by Oregon Law.
22. WARRANTIES SELLER DISCLAIMS. I understand that any warranties on the
vehicle sold are those made by the manufacturer. I am purchasing the vehicle
"as is" from you and you are not offering any warranties, either express or
implied, including any implied warranties of merchantability or fitness for a
particular purpose of the vehicle. Except for the warranty of the
manufacturer, if any, I assume entire risk as to the quality and performance of
the vehicle, and if the vehicle proves defective after the purchase, I assume
the entire cost of all necessary servicing or repair. I also understand that
you will not be responsible for incidental or consequential damages arising
from loss of use, loss of time, inconvenience or commercial loss.
- ------------------------------------------------------------------------------
REPURCHASE ASSIGNMENT
---------------------
FOR VALUE RECEIVED [ ]without recourse [ ] with recourse, except as provided
herein and in any written agreement regarding purchase of contracts executed by
Seller and Assignee and now in effect, Seller hereby endorses and assigns to
____________________________________________________ ("Assignee") this contract
and all right, title and interest of Seller in and to the Property described in
the contract.
Seller represents and warrants that this contract arose from the sale of
the Property, that the title to the Property was at the time of sale vested in
Seller free of all liens and encumbrances and that a security interest in the
Property is now vested in Seller subject only to the right of Buyer and any
Other Owner (hereafter collectively referred to as "Customer"); that the
Property is as represented to Customer by Seller, that his contract is valid
and enforceable against Customer, and that there is unpaid the full amount
represented as being owing, which amount is subject to no defense, set-off, or
counterclaim whatsoever, or want of legal capacity on the part of Customer.
Seller shall indemnify and hold harmless the Assignee against all claims and
defenses, whether valid or invalid, relating to the Property or acts or
omissions of Seller including, without limitation, any based on the Federal
Consumer Credit Protection Act or other state or federal law.
As a partial consideration for the purchase of this contract by Assignee,
Seller hereby agrees not to assert against Assignee any claim, lien or
encumbrance which Seller now has or may hereafter have with respect to the
Property.
This assignment shall inure to the benefit of and be binding upon the heirs,
executors, administrators, successors and assigns of Seller.
If the Property described in this contract is of a type for which a
certificate of title may be obtained, Seller agrees to perfect a security
interest in the Property in favor of Assignee within ten days of the date of
this contract as shown on the reverse hereof and to provide Assignee with a
certificate of title showing Assignee as first priority security interest
holder within 30 days of the date of this contract. If Seller fails to comply
with the immediately preceding sentence, Seller will, immediately upon
Assignee's demand, repurchase the contract for the amount owing on the
contract, even if the Property is not repossessed or tendered to Seller.
Dated_________ 19__ _______________________ By_____________________________
(Type Firm Name) (Seller) (Title)
- ------------------------------------------------------------------------------
ASSIGNMENT AND GUARANTY
-----------------------
FOR VALUE RECEIVED, the undersigned Seller hereby endorses and assigns to
_______________________ ("Assignee") this contract and all monies to become due
thereunder and also grants, bargains, sells and conveys to Assignee all of the
right, title and interest of the Seller in and to the Property described in
this contract.
In consideration of the purchase of this contract by Assignee, Seller
guarantees the payment of the unpaid balance evidenced thereby and agrees to
pay upon demand that unpaid balance if Buyer or any Other Owner (hereafter
collectively referred to as "Customer") in this contract defaults in the
performance of this contract, or if any of the warranties are found untrue.
The undersigned warrants that Seller has title to this contract and has a valid
security interest in the Property; that Seller has the right to make this
assignment and transfer; that the Property is free from any liens or
encumbrances; that this contract is valid and enforceable against Customer, and
that there is unpaid on it the full amount represented as being owing on it,
which amount is subject to no defense, set-off, or counterclaim, whatsoever, or
want of legal capacity on the part of Customer. Seller hereby consents that
Assignee, or its successors or assigns may, without notice to Seller, extend
the time for payments under this contract, waive the performance of such terms
and conditions of the contract as it may determine, and make any reasonable
settlement under the contract without affecting or limiting Seller's liability
as guarantor.
For the purpose of inducing Assignee to purchase this contract Seller
submits the accompanying Customer's application which the Seller believes to be
true, and declares that the contract arose from the bona fide sale of the
Property described in this contract, and that the Property has been delivered
into the possession of Customer. In further consideration of the purchase of
this contract, Seller agrees that if the Property is returned by or repossessed
from Customer, Assignee, its successors or assigns, may recover from Seller the
balance due on the contract or may sell the Property, apply the proceeds on the
balance due and recover any deficiency from Seller; in either of such events
recovering also a reasonable attorney's fee and costs of suit and expense, if
attorneys' fees to Assignee, its successors or assigns, and in case suit or
action is instituted upon this guaranty Seller promises to pay such sum as the
court may adjudge reasonable as attorneys' fees in such suit or action,
including any appeal. Seller shall indemnify and hold harmless Assignee
against all claims and defenses, whether valid or invalid, relating to the
Property or acts or omission of Seller including, without limitation, any based
on the Federal Consumer Credit Protection Act or other state or federal law.
The terms of this Assignment and Guaranty shall be effective
notwithstanding anything to the contrary contained in any of the provisions of
the contract, Dealer Repurchase Agreement or other agreement executed in
connection with it.
This Assignment and Guaranty shall inure to the benefit of and be binding
upon Seller's heirs, executors, administrators, successors and assigns.
If the Property described in this contract is of a type for which a
certificate of title may be obtained, Seller agrees to perfect a security
interest in the Property in favor of Assignee within ten days of the date of
this contract as shown on the reverse hereof and to provide Assignee with a
certificate of title showing Assignee as first priority security interest
holder within 30 days of the date of this contract. If Seller fails to comply
with the immediately preceding sentence, Seller will, immediately upon
Assignee's demand, repurchase the contract for the amount owing on the
contract.
Dated_________ 19__ _______________________ By_____________________________
(Type Firm Name) (Seller) (Title)
<PAGE>
EXHIBIT 10(c)
BILL OF SALE
EFFECTIVE DATE: January 20, 1998
PARTIES:
ALBERT CREDIT, LLC, an
Oregon Limited Liability Co. ("Seller")
CREDIT CONCEPTS, INC.,
an Oregon corporation ("Buyer")
AGREEMENTS:
IN CONSIDERATION of the mutual promises of the parties, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer hereby agree as follows:
1. TRANSFER OF ASSETS. Seller hereby conveys, transfers, assigns,
grants, sells and delivers to Buyer, and Buyer acquires, accepts, and purchases
all of the assets of Seller including, without limitation, those assets
described in paragraphs 1.1 through 1.4 hereof ("Assets"):
1.1 All cash of Seller;
1.2 All equipment, furniture and fixtures owned by Seller;
1.3 All inventories of supplies and merchandise owned by Seller;
1.4 All general intangibles including, without limitation, all accounts
and contract rights owned by Seller.
2. FURTHER ASSURANCES. Seller shall execute and deliver to Buyer such
further documents and instruments, if any, and take such other action that may
be reasonably requested by Buyer to evidence this conveyance of the Assets.
3. BINDING EFFECT. This Bill of Sale shall be effective as of the date
hereof and shall inure to the benefit of and be binding upon the parties hereto
and their successors or assigns.
SELLER: BUYER:
ALBERT CREDIT, LLC CREDIT CONCEPTS, INC.
By: /s/Thomas W. Palmer, Mgr/Mbr By: /s/Thomas W. Palmer, Pres
---------------------------- -------------------------
Title Title
<PAGE>
EXHIBIT 10(d)
LOAN AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA /s/ SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
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THIS LOAN AGREEMENT between Credit Concepts, Inc. ("Borrower") and Pacific
Continental 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 April 6, 1998, 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 Loan Agreement, as this Loan
Agreement may be amended or modified from time to time. together with all
exhibits and schedules attached to this Loan Agreement from time to time.
ACCOUNT. The word "Account" means a trade account, account receivable, or
other right to payment for goods sold or services rendered owing to Borrower
(or to a third party grantor acceptable to Lender).
ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
obligated upon an Account.
ADVANCE. The word "Advance" means a disbursement of Loan funds under this
Agreement.
BORROWER. The word "Borrower" means Credit Concepts, Inc.. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $3,000,000.00; or (b) 70.000% of the
aggregate amount of Eligible Accounts.
BUSINESS DAY. The words "Business Day" mean a day on which commercial
banks are open for business in the State of Oregon.
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. The word 'Collateral" includes without limitation
all collateral described below in the section titled "COLLATERAL."
DEBT. The word "Debt means all of Borrower's liabilities excluding
Subordinated Debt.
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean, at any time, all
of Borrower's Accounts which contain selling terms and conditions acceptable to
Lender. The net amount of any Eligible Account against which Borrower may
borrow shall exclude all returns, discounts, credits, and offsets of any
nature. Unless otherwise agreed to by Lender In writing, Eligible Accounts do
not include:
(a) Accounts with respect to which the Account Debtor is an officer,
an employee or agent of Borrower.
(b) Accounts with respect to which the Account Debtor is a
subsidiary of, or affiliated with or related to Borrower or its shareholders,
officers, or directors.
(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the Account
Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such Accounts are supported
by insurance, bonds or other assurances satisfactory to Lender.
(e) Accounts with respect to which Borrower is or may become liable
to the Account Debtor for goods sold or services rendered by the Account Debtor
to Borrower.
(f) Accounts which are subject to dispute, counterclaim, or setoff.
(g) Accounts with respect to which the goods have not been shipped
or delivered, or the services have not been rendered, to the Account
Debtor.
(h) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial condition of the Account Debtor to be
unsatisfactory.
(i) Accounts of any Account Debtor who has filed or has had filed
against it a petition In bankruptcy or an application for relief under any
provision of any state or federal bankruptcy, insolvency, or debtor-in-relief
acts; or who has had appointed a trustee, custodian, or receiver for the assets
of such Account Debtor; or who has made an assignment for the benefit of
creditors or has become insolvent or fails generally to pay its debts
(including its payrolls) as such debts become due.
(j) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.
(k) Eligible notes receivable and accounts are defined as those not
delinquent more than 90 days. Lender reserves the right to eliminate from the
Borrowing Base those notes receivable and accounts it deemed ineligible or
uncollectible.
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."
EXPIRATION DATE. The words "Expiration Date" mean the date of termination
of Lender's commitment to lend under this Agreement.
GRANTOR. The word "Grantor" means and includes without limitation each
and all of the persons or 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 guarantor 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 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 Pacific Continental Bank, its successors
and assigns.
LINE OF CREDIT. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT," below.
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,
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.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject to
the following conditions precedent, with all documents, instruments, opinions,
reports, and other items required under this Agreement to be in form and
substance satisfactory to Lender:
(a) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered by
Borrower to Lender.
(b) Lender shall have received such opinions of counsel,
supplemental opinions, and documents as Lender may request.
(c) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall be in
full force and effect.
(d) All guaranties required by Lender for the Line of Credit shall
have been executed by each Guarantor, delivered to Lender, and be in full force
and effect.
(e) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, books, records, and operations, and
Lender shall be satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due and
payable.
(g) There shall not exist at the time of any Advance a condition
which would constitute an Event of Default under this Agreement, and Borrower
shall have delivered to Lender the compliance certificate called for in the
paragraph below titled "Compliance Certificate."
MAKING LOAN ADVANCES. Advances under the Line of Credit may be requested
either orally or in writing by authorized persons. Lender may, but need not,
require that all oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the benefit of
Borrower (a) when credited to any deposit account of Borrower maintained with
Lender or (b) when advanced in accordance with the instructions of an
authorized person. Lender, at its option, may set a cutoff time, after which
all requests for Advances will be treated as having been requested on the next
succeeding Business Day. Under no circumstances shall Lender be required to
make any Advance in an amount less than $100.00.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount
of the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount of
all Advances then outstanding and all accrued unpaid Interest, together with
all other applicable fees, costs and charges, if any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility. Lender
shall provide Borrower with periodic statements of Borrower's account, which
statements shall be considered to be correct and conclusively binding on
Borrower unless Borrower notifies Lender to the contrary within thirty (30)
days after Borrower's receipt of any such statement which Borrower deems to be
incorrect.
COLLATERAL. To secure payment of the Line of Credit and performance of all
other Loans, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require (the "Collateral"), including without
limitation Borrower's present and future Accounts and general intangibles.
Lender's Security Interests in the Collateral shall be continuing liens and
shall include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral,
Borrower agrees and represents and warrants to Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute such
financing statements and to take whatever other actions are requested by Lender
to perfect and continue Lender's Security Interests in the Collateral. Upon
request of Lender, Borrower will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Borrower will note Lender's
interest upon any and all chattel paper if not delivered to Lender for
possession by Lender. Contemporaneous with the execution of this Agreement,
Borrower will execute one or more UCC financing statements and any similar
statements as may be required by applicable law, and will file such financing
statements and all such similar statements in the appropriate location or
locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact
for the purpose of executing any documents necessary to perfect or to continue
any Security Interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile, or other
reproduction of any financing statement for use as a financing statement.
Borrower will reimburse Lender for all expenses for the perfection,
termination, and the continuation of the perfection of Lender's security
interest in the Collateral. Borrower promptly will notify Lender of any change
in Borrower's name including any change to the assumed business names of
Borrower. Borrower also promptly will notify Lender of any change in
Borrower's Social Security Number or Employer Identification Number. Borrower
further agrees to notify Lender in writing prior to any change in address or
location of Borrower's principal governance office or should Borrower merge or
consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records shall
be available to Lender or Lender's representative upon demand for inspection
and copying at any reasonable time. With respect to the Accounts, Borrower
agrees to keep and maintain such records as Lender may require, including
without limitation information concerning Eligible Accounts and Account
balances and agings.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of
this Agreement, Borrower shall execute and deliver to Lender a schedule of
Accounts and Eligible Accounts, in form and substance satisfactory to the
Lender. Thereafter Borrower shall execute and deliver to Lender such
supplemental schedules of Eligible Accounts and such other matters and
information relating to Borrower's Accounts as Lender may request.
Supplemental schedules shall be delivered according to the following schedule:
monthly, on the 15th and 30th of each month. Schedules shall include a
complete listing of outstanding contract receivables.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (b) All Account information listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; and (c) Lender, its
assigns, or agents shall have the right at any time and at Borrower's expense
to inspect, examine, and audit Borrower's records and to confirm with Account
Debtors the accuracy of such Accounts.
NOTIFICATION BASIS. Borrower agrees and understands that this Loan shall
be on a notification basis pursuant to which Lender shall directly collect and
receive all proceeds and payments from the Accounts in which Lender has a
security interest. In order to facilitate the foregoing, Borrower agrees to
deliver to Lender, upon demand, any and all of Borrower's records, ledger
sheets, payment cards, and other documentation, in the form requested by
Lender, with regard to the Accounts. Borrower further agrees that Lender shall
have the right to notify each Account Debtor, pay such proceeds and payments
directly to Lender, and to do any and all other things as Lender may deem to be
necessary and appropriate, within its sole discretion, to carry out the terms
and intent of this Agreement. Lender shall have the further right, where
appropriate and within Lender's sole discretion, to file suit, either in its
own name or in the name of Borrower, to collect any and all such Accounts.
Borrower further agrees that Lender may take such other actions, either in
Borrower's name or Lender's name, as Lender may deem appropriate within its
sole judgment, with regard to collection and payment of the Accounts, without
affecting the liability of Borrower under this Agreement or on the
Indebtedness.
REMITTANCE ACCOUNT. Borrower agrees that Lender may at any time require
Borrower to institute procedures whereby the payments and other proceeds of the
Accounts shall be paid by the Account Debtors under a remittance account or
lock box arrangement with Lender, or Lender's agent, or with one or more
financial institutions designated by Lender. Borrower further agrees that, if
no Event of Default exists under this Agreement, any and all of such funds
received under such a remittance account or lock box arrangement shall, at
Lender's sole election and discretion, either be (a) paid or turned over to
Borrower; (b) deposited into one or more accounts for the benefit of Borrower
(which deposit accounts shall be subject to a security assignment in favor of
Lender); (c) deposited into one or more accounts for the joint benefit of
Borrower and Lender (which deposit accounts shall likewise be subject to a
security assignment in favor of Lender); (d) paid or turned over to Lender to
be applied to the Indebtedness in such order and priority as Lender may
determine within its sole discretion; or (e) any combination of the foregoing
as Lender shall determine from time to time. Borrower further agrees that,
should one or more Events of Default exist, any and all funds received under
such a remittance account or lock box arrangement shall be paid or turned over
to Lender to be applied to the Indebtedness, again in such order and priority
as Lender may determine within its sole discretion.
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 Oregon 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, governmental regulation, court
decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of the
date of 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 for Permitted Liens, 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 or intended to protect human health or the environment
("Environmental Laws"). 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
Environmental Laws. Borrower authorizes Lender and its agents to enter upon
the properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section of the
Agreement. Any inspections or tests made by Lender shall be 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, 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, or as a result of a violation of any Environmental Laws.
The provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the termination or
expiration of this Agreement and shall not be affected by 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 2149 Centennial Plaza, Suite 2, Eugene, OR 97401.
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, reviewed by a
certified public accountant satisfactory to Lender, and, as soon as available,
but in no event later than fifteen (15) days after the end of each month,
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:
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not
less than $300,000.00.
The following provisions shall apply for purposes of determining
compliance with the foregoing financial covenants and ratios: FINANCIAL RATIOS
WILL BE CALCULATED USING THE CPA REVIEWED YEAR END FINANCIAL STATEMENT FOR THE
PERIOD ENDING DECEMBER 31, 1998. 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 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. 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.
LIFE INSURANCE. As soon as practical, obtain and maintain life insurance
in form and with insurance companies reasonably acceptable to Lender on the
following individuals in the amounts indicated below and, at Lender's option,
cause such insurance coverage to be pledged, made payable to, or assigned to
Lender on Lender's forms. Lender, at its discretion, may apply the proceeds of
any insurance policy to the unpaid balances of any Indebtedness:
<TABLE>
<CAPTION>
NAMES OF INSURED AMOUNTS
------------------ -------------
<S> <C> <C>
Eugene C. Albert $250,000.00
Thomas W. Palmer $250,000.00
</TABLE>
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans I named below, on Lender's forms, and in the amounts
and under the conditions spelled out in those guaranties.
<TABLE>
<CAPTION>
GUARANTORS AMOUNTS
------------------ ---------------
<S> <C> <C>
Ted W. Palmer $1,000,000.00
Thomas W. Palmer $3,000,000.00
Eugene C. Albert $3,000,000.00
</TABLE>
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 PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in writing.
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 the
same shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with respect to
such contested assessment, tax, charge, levy, lien, or claim in accordance with
generally accepted accounting practices. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
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 laws applicable to
Borrower's employee benefit plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or 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
(d0) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency
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 consolidate with any
other entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock), provided, however
that notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends, if
Borrower is a "Subchapter S 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; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
any other loan with Lender; or (e) Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred.
OPERATING PROCEDURES. Advances will be based on eligible notes receivable,
contracts receivable and accounts, and will be limited to 70% of the aggregate
outstanding balances of notes receivable. Lender reserves the right to
eliminate from the Borrowing Base those notes receivable and accounts it deems
ineligible or uncollectible.
GUARANTOR FINANCIAL STATEMENTS. Guarantor will provide current, updated
financial statements to Lender on an annual basis.
FINANCIAL COVENANTS AND RATIOS. While this agreement is in effect, Borrower
shall comply with the following covenants and ratios:.
DEBT TO TANGIBLE NET WORTH. Borrower to achieve a maximum Debt to Tangible Net
Worth of 5.00:1.00 by December 31, 1998, and maintain said ratio as required
herein.
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 creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower, any creditor of any Grantor
against any collateral securing the indebtedness, or by any governmental
agency. This includes a garnishment, attachment, or levy on or of any of
Borrower's deposit accounts with Lender. However, this Event of Default shall
not apply if there is a good faith dispute by Borrower or Grantor, 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.
INSECURITY. Lender, in good faith, deems itself insecure.
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 the case of an Event of Default of the
type described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall 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 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 Borrower or of any Grantor shall not affect
Lender's right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
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 Oregon. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
the State of Oregon. Lender and Borrower hereby waive the right to any jury
trial In any action, proceeding, or counterclaim brought by either Lender or
Borrower against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
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 (unless otherwise required by
law), 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.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3,1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE
ENFORCEABLE.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT,
AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF APRIL 6, 1998.
BORROWER:
Credit Concepts, Inc.
By: /s/ Tom W. Palmer By: /s/ Eugene C. Albert
------------------------------- ------------------------------
Thomas W. Palmer, President Eugene C. Albert, Secretary
LENDER:
Pacific Continental Bank
By: /s/
-------------------------------
Authorized Officer
<PAGE>
AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT (the "Amendment") is entered into this
4th day of November, 1998 by and among CREDIT CONCEPTS, INC., an Oregon
corporation ("Borrower"), and PACIFIC CONTINENTAL BANK, an Oregon banking
corporation ("Lender").
RECITALS
--------
A. Borrower and Lender are parties to that certain Loan Agreement (the
"Loan Agreement"), Promissory Note, Commercial Security Agreement(s) and other
Related Documents (as defined therein) dated April 6, 1998 (the "Loan
Documents"). All capitalized terms not otherwise defined herein shall have the
meaning assigned thereto under the Loan Agreement.
B. Borrower desires to raise additional capital to finance its
operations through offering for sale to qualified investors certain Investment
Certificates (the "Investment Certificates") in the form or forms attached
hereto as Exhibit A. When issued, each Investment Certificate will entitle the
holder to receive principal and interest payments from Borrower in accordance
with the terms of each such Investment Certificate, provided, however, the
right of the Investment Certificate holder to receive payment of principal and
interest due thereunder is subordinate to the Lender's prior right to receive
payment in full from Borrower and from Borrower's assets of all amounts owed to
Lender under the Loan Documents.
C. The terms of the Loan Agreement require that Borrower must obtain
from Lender its consent in advance of Borrower's issuance of any Investment
Certificates. Subject to the terms and conditions set forth in this Amendment,
Lender consents as set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements set forth below and for other valuable consideration, Lender and
Borrower hereby agree as follows:
1. CONSENT TO ISSUANCE OF INVESTMENT CERTIFICATES. Anything to the
contrary in the Loan Agreement or other Loan Documents notwithstanding
(including, without limitation, any Negative Covenant prohibiting Borrower from
incurring indebtedness outside the ordinary course of business), Lender hereby
consents to the Borrower's issuance of Investment Certificates for the purpose
of raising additional capital to finance Borrower's business operations.
2. TREATMENT OF INVESTMENT CERTIFICATE INDEBTEDNESS AS SUBORDINATED
DEBT. For the purpose of calculating compliance with financial ratio covenants
under the Loan Agreement, Lender agrees that any indebtedness incurred by
Borrower pursuant to the issuance of Investment Certificates in the forms
attached as Exhibit "A" will be considered by the Lender to be Subordinated
Debt.
3. REPAYMENT OF SUBORDINATED DEBT IN THE ABSENCE OF DEFAULT UNDER THE
LOAN DOCUMENTS. The parties agree that unless and until there shall occur an
event of default under the Loan Agreement which remains uncured after all
applicable cure periods, the Borrower shall be authorized to make, and the
holders of the Investment Certificates are entitled to receive, all payments of
principal and interest due under the Investment Certificates. Notwithstanding
the foregoing, Borrower shall not be authorized to make nor shall the Holders
be permitted to retain payments of principal and interest under the Investment
Certificates where, but for the requirement of notice or opportunity to cure,
the making of such payment would constitute an event of default under the Loan
Agreement.
4. NOTICE OF SUBORDINATION. Borrower shall give notice in the
Investment Certificates, Offering Summary and Prospectus that the Investment
Certificates are subordinate to all bank indebtedness and that the bank
indebtedness is secured by a security interest in all of Borrower's contracts,
receivables and their proceeds.
5. ENTIRE AGREEMENT. This Amendment, together with the Loan Agreement
and the other Loan Documents as amended, is the entire agreement between the
parties hereto with respect to the subject matter hereof. This Amendment
supersedes all prior and contemporaneous oral and written agreements and
discussions with respect to the subject matter hereof.
6. COUNTERPARTS. This Amendment may be executed in identical
counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of
a signature page to the Amendment by facsimile transmission shall be effective
as delivery of a manually executed counterpart thereof.
7. CONFIRMATION OF TERMS AND NO NOVATION. Except as expressly modified
by this Amendment, the provisions of the Loan Agreement and Loan Documents are
in full force and effect.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
BORROWER: CREDIT CONCEPTS, INC.,
an Oregon corporation
By: /s/ Tom W. Palmer
-------------------------------
Its: President
-------------------------------
LENDER: PACIFIC CONTINENTAL BANK,
an Oregon banking corporation
By: /s/
------------------------------
Its: Vice President
------------------------------
GUARANTOR'S CONSENT
-------------------
Ted W. Palmer, Thomas W. Palmer and Eugene C. Albert (the "Guarantors")
have guaranteed the indebtedness of Borrower to Lender, including but not
limited to the indebtedness evidenced by the Loan Agreement and the Loan
Documents, pursuant to the terms of written commercial guaranty agreements
("Commercial Guaranty") signed by the Guarantors. The Guarantors hereby wave
any rights or defenses arising by reason of this Amendment to Loan Agreement.
The Guarantors restate their absolute and unconditional guarantee and promise
to pay to Lender the indebtedness (as that term is defined in the Commercial
Guaranty), as modified by this Amendment to Loan Agreement, pursuant to the
terms of the Commercial Guaranty.
GUARANTORS /s/
---------------------------------
Ted W. Palmer
/s/
---------------------------------
Thomas W. Palmer
/s/
---------------------------------
Eugene C. Albert
<PAGE>
EXHIBIT A
INVESTMENT CERTIFICATE
<PAGE>
Certificate Number: ____________ Principal Amount:________________
Date of Maturity: ______________ Interest Rate: __________________
CREDIT CONCEPTS, Inc.
SHORT-TERM INVESTMENT CERTIFICATE
This is to certify that Credit Concepts, Inc., an Oregon corporation (the
"Company") promises to pay to _______________________________________________,
or assigns ("Holder") the sum of ___________________________ thousand and
no/100 dollars ($___,000.00) at the principal offices of the Company on
_______________________ ("Date of Maturity"), which is two (2) years from the
date hereof. This Investment Certificate shall bear simple interest at the
rate of eight percent (8%). Interest on this Investment Certificate shall be
paid and mailed to the Holder's address as registered on the books of the
Company, within five days following the end of each fiscal quarter of the
Company. By written notice to the Company, accompanied by delivery of the
original of this Certificate, the Holder may accelerate the Date of Maturity to
the ninetieth (90th) day following the date of the Company's receipt of the
notice and Certificate, but in such event no interest will accrue between the
date of receipt of the notice and the Date of Maturity as so accelerated.
Although this Investment Certificate is not a negotiable instrument, this
Investment Certificate may be assigned but only through use of the form of
assignment appearing on the reverse side of this Investment Certificate. In
the event of assignment, the assignee should submit this Certificate to the
Company so that it may be registered in the name of the assignee on the
Company's books and the assignee will become the Holder of record entitled to
interest payments paid after that date. If interest is not timely paid within
ten days of the payment date, the entire sum of principal and interest shall,
at the option of the Holder, become immediately due and payable without notice.
In the event the Holder is required to institute collection proceedings on this
Investment Certificate, the Company shall pay all costs thereof, including
reasonable attorneys fees. On the Date of Maturity the Holder must present
this Certificate to the Company for payment, as interest on this Certificate
ceases to accrue after that date. PAYMENT OF PRINCIPAL AND INTEREST DUE UNDER
THIS INVESTMENT CERTIFICATE IS EXPRESSLY SUBORDINATE AND JUNIOR TO THE RIGHTS
OF ANY ONE OR MORE COMMERCIAL BANKS WHICH, NOW OR IN THE FUTURE, MAKE A LOAN OR
OTHERWISE EXTEND CREDIT TO THE COMPANY. IN THE ABSENCE OF A DEFAULT IN THE
COMPANY'S OBLIGATIONS TO SUCH BANKS, PRINCIPAL AND INTEREST PAYMENTS MAY BE
MADE TO THE HOLDER OF THIS CERTIFICATE. HOWEVER, IN THE EVENT THE COMPANY
DEFAULTS IN ITS OBLIGATIONS OWED TO THE BANK(S), NO PRINCIPAL OR INTEREST
PAYMENTS PAID OR FALLING DUE UNDER THIS CERTIFICATE AFTER THAT DATE MAY BE MADE
BY THE COMPANY OR RETAINED BY THE HOLDER UNTIL ALL OBLIGATIONS TO THE BANK(S)
HAVE BEEN PAID IN FULL. NO PAYMENT SHALL BE REQUIRED UNDER THIS CERTIFICATE IF
THE PAYMENT WOULD CAUSE AN EVENT OF DEFAULT UNDER THE COMPANY'S OBLIGATIONS TO
THE BANK(S). IN THE EVENT OF A BANKRUPTCY BY THE COMPANY, THE BANK(S) SHALL BE
ENTITLED TO FILE AND VOTE THE CLAIMS OF THE HOLDERS OF THESE CERTIFICATES.
IN WITNESS WHEREOF, the Company has caused this Investment Certificate to
be signed below by its duly authorized officers as of this ___ day of
_______________, 199__.
____________________________ (Corporate Seal) ____________________________
(Tom W. Palmer) President (Eugene C. Albert) Secretary
<PAGE>
Exhibit 10(e)
PROMISSORY NOTE
<TABLE>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
<TABLE>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
PRINCIPAL AMOUNT: $3,000,000.00 INITIAL RATE: 10.750% DATE OF NOTE: April 6, 1998
- --------------------------------------------------------------------------------------------------------
</TABLE>
PROMISE TO PAY. Credit Concepts, Inc. ("Borrower") promises to pay to Pacific
Continental Bank ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Three Million & 00/100 Dollars ($3,000,000.00)
or so much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on June 15, 1999. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest beginning
May 15, 1998, 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 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 PRIME CHANGES.
The Index currently is 8.500% per annum. The interest rate to be applied to
the unpaid principal balance of this Note will be at a rate of 2.250 percentage
points over the Index, adjusted it necessary for the minimum and maximum rate
limitations described below, resulting in an initial rate of 10.750% per annum.
Notwithstanding any other provision of this Note, the variable interest rate or
rates provided for in this Note will be subject to the following minimum and
maximum rates. NOTICE: Under no circumstances will the interest rate on this
Note be less than 10.250% per annum or more than the maximum rate allowed by
applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment
of this Note, Borrower understands that Lender is entitled to a minimum
interest charge of $5.00. Other than Borrower's obligation to pay any minimum
interest charge, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed to
by Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
LATE CHARGE. If a payment is 16 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.
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 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 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. (e) Borrower dissolves (regardless of
whether election to continue is made), any member withdraws from Borrower, any
member dies, or any of the members or 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. (i) Lender in good faith deems Itself insecure.
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 5.250 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 Oregon. If there Is
a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction
of the courts of Lane County, the State of Oregon. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of Oregon.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $18.50 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.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested either orally or in writing by Borrower or by
an authorized person. Lender may, but need not, require that all oral requests
be confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's office shown
above. The following party or parties are authorized 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: Thomas W. Palmer,
President; and Eugene C. Albert, Secretary. 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,
regardless of the fact that persons other than those authorized to borrow have
authority to draw against the accounts. 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 or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (e) Lender in
good faith deems itself insecure under this Note or any other agreement between
Lender and Borrower.
OPERATING PROCEDURES. Advances will be based on eligible notes receivable,
contracts receivable and accounts, and will be limited to 70% of the aggregate
outstanding balances of notes receivable. Lender reserves the right to
eliminate from the Borrowing Base those notes receivable and accounts it deems
ineligible or uncollectible.
PRIOR NOTE. This Note replaces the Promissory Note delivered to Lender on
March 10, 1998 by Credit Concepts, Inc. Lender reserves the right to eliminate
from the Borrowing Base those notes receivable and accounts it deems ineligible
or uncollectible.
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.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
US TO BE ENFORCEABLE.
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:
Credit Concepts, Inc.
By: ____________________________________ By:______________________________
Thomas W. Palmer, President Eugene C. Albert, Secretary
<PAGE>
EXHIBIT 10(f)
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
GUARANTOR: Thomas W. Palmer
2274 Marie Lane
Eugene, OR 97401
- -------------------------------------------------------------------------------
AMOUNT OF GUARANTY. The amount of this Guaranty is Three Million & 00/100
Dollars ($3,000,000.00).
CONTINUING GUARANTY. For good and valuable consideration, Thomas W. Palmer
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Pacific Continental Bank ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) of Credit
Concepts, Inc. ("Borrower") to Lender on the terms and conditions set forth in
this Guaranty. The obligations of Guarantor under this Guaranty are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
BORROWER. The word "Borrower" means Credit Concepts, Inc.
GUARANTOR. The word "Guarantor" means Thomas W. Palmer.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated April 6, 1998.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them,
and any present or future judgments against Borrower, or any of them; and
whether any such Indebtedness is voluntarily or involuntarily incurred, due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined; whether Borrower may be liable individually or jointly with
others, or primarily or secondarily, or as guarantor or surety; whether
recovery on the Indebtedness may be or may become barred or unenforceable
against Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity, ultra
vires, or otherwise.
LENDER. The word "Lender" means Pacific Continental Bank, its successors
and assigns.
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.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty
shall not exceed at any one time $3,000,000.00 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 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's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. 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. Accordingly, no payments made upon the Indebtedness will discharge
or diminish the continuing liability of Guarantor in connection with any
remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
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 incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. 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. It is anticipated
that fluctuations may occur in the aggregate amount of Indebtedness covered by
this Guaranty, and it is specifically acknowledged and agreed by Guarantor that
reductions in the amount of Indebtedness, even to zero dollars ($0.00), prior
to written revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty Is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may
from time to time be zero dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, 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 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 give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) 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; (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 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 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 Oregon. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
State of Oregon. Lender and Guarantor hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Oregon.
ATTORNEYS' 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 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 (unless
otherwise required by law), and, except for revocation notices by Guarantor,
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. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." 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 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.
GUARANTOR FINANCIAL STATEMENTS. Guarantor will provide current, updated
financial statements to Lender on an annual basis.
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 APRIL 6, 1998.
GUARANTOR:
/s/ Tom W. Palmer
- ------------------------------
Thomas W. Palmer
<PAGE>
EXHIBIT 10(g)
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
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<S> <C> <C> <C>
4 330 SCA
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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.
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</TABLE>
BORROWER: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
GUARANTOR: Eugene C. Albert
2358 Birch Lane
Eugene, OR 97403
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AMOUNT OF GUARANTY. The amount of this Guaranty is Three Million & 00/100
Dollars ($3,000,000.00).
CONTINUING GUARANTY. For good and valuable consideration, Eugene C. Albert
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Pacific Continental Bank ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) of Credit
Concepts, Inc. ("Borrower") to Lender on the terms and conditions set forth in
this Guaranty. The obligations of Guarantor under this Guaranty are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
BORROWER. The word "Borrower" means Credit Concepts, Inc.
GUARANTOR. The word "Guarantor" means Eugene C. Albert.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated April 6, 1998.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them,
and any present or future judgments against Borrower, or any of them; and
whether any such Indebtedness is voluntarily or involuntarily incurred, due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined; whether Borrower may be liable individually or jointly with
others, or primarily or secondarily, or as guarantor or surety; whether
recovery on the Indebtedness may be or may become barred or unenforceable
against Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity, ultra
vires, or otherwise.
LENDER. The word "Lender" means Pacific Continental Bank, its successors
and assigns.
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.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty
shall not exceed at any one time $3,000,000.00 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 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's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. 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. Accordingly, no payments made upon the Indebtedness will discharge
or diminish the continuing liability of Guarantor in connection with any
remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
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 incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. 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. It is anticipated
that fluctuations may occur in the aggregate amount of Indebtedness covered by
this Guaranty, and it is specifically acknowledged and agreed by Guarantor that
reductions in the amount of Indebtedness, even to zero dollars ($0.00), prior
to written revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty Is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may
from time to time be zero dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, 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 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 give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) 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; (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 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 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 Oregon. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
State of Oregon. Lender and Guarantor hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Oregon.
ATTORNEYS' 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 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 (unless
otherwise required by law), and, except for revocation notices by Guarantor,
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. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." 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 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.
GUARANTOR FINANCIAL STATEMENTS. Guarantor will provide current, updated
financial statements to Lender on an annual basis.
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 APRIL 6, 1998.
GUARANTOR:
/s/ Eugene C. Albert
- ------------------------------------
Eugene C. Albert
<PAGE>
EXHIBIT 10(h)
COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4 330 SCA /s/ SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
GUARANTOR: Ted W. Palmer
P.O. Box 1680
Newport, OR 99156
- -------------------------------------------------------------------------------
AMOUNT OF GUARANTY. The amount of this Guaranty is One Million & 00/100
Dollars ($1,000,000.00).
CONTINUING GUARANTY. For good and valuable consideration, Ted W. Palmer
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Pacific Continental Bank ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) of Credit
Concepts, Inc. ("Borrower") to Lender on the terms and conditions set forth in
this Guaranty. The obligations of Guarantor under this Guaranty are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
BORROWER. The word "Borrower" means Credit Concepts, Inc.
GUARANTOR. The word "Guarantor" means Ted W. Palmer.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated April 6, 1998.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them,
and any present or future judgments against Borrower, or any of them; and
whether any such Indebtedness is voluntarily or involuntarily incurred, due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined; whether Borrower may be liable individually or jointly with
others, or primarily or secondarily, or as guarantor or surety; whether
recovery on the Indebtedness may be or may become barred or unenforceable
against Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity, ultra
vires, or otherwise.
LENDER. The word "Lender" means Pacific Continental Bank, its successors
and assigns.
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.
MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY
SHALL NOT EXCEED AT ANY ONE TIME $1,000,000.00 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 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's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. 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. Accordingly, no payments made upon the Indebtedness will discharge
or diminish the continuing liability of Guarantor in connection with any
remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted. 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 incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and
modifications of the indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. 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. IT IS ANTICIPATED
THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED BY
THIS GUARANTY, AND IT IS SPECIFICALLY ACKNOWLEDGED AND AGREED BY GUARANTOR THAT
REDUCTIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR
TO WRITTEN REVOCATION OF THIS GUARANTY BY GUARANTOR SHALL NOT CONSTITUTE A
TERMINATION OF THIS GUARANTY. THIS GUARANTY IS BINDING UPON GUARANTOR AND
GUARANTOR'S HEIRS, SUCCESSORS AND ASSIGNS SO LONG AS ANY OF THE GUARANTEED
INDEBTEDNESS REMAINS UNPAID AND EVEN THOUGH THE INDEBTEDNESS GUARANTEED MAY
FROM TIME TO TIME BE ZERO DOLLARS ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A) PRIOR TO
REVOCATION AS SET FORTH ABOVE, 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 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 give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) 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; (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 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 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 Oregon. If there is a lawsuit, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
State of Oregon. Lender and Guarantor hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Oregon.
ATTORNEYS' 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 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 (unless
otherwise required by law), and, except for revocation notices by Guarantor,
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. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." 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 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.
GUARANTOR FINANCIAL STATEMENTS. Guarantor will provide current, updated
financial statements to Lender on an annual basis.
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 APRIL 6, 1998.
GUARANTOR:
/s/ Ted W. Palmer
- --------------------------------
Ted W. Palmer
<PAGE>
EXHIBIT 10(i)
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
- -------------------------------------------------------------------------------
THIS COMMERCIAL SECURITY AGREEMENT is entered into between Credit Concepts,
Inc. (referred to below as "Grantor"); and Pacific Continental 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, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL
INTANGIBLES, TOGETHER WITH THE FOLLOWING SPECIFICALLY DESCRIBED
PROPERTY: INCLUDING BUT NOT LIMITED TO: ALL PROMISSORY NOTES, LOANS
RECEIVABLE, NOTES RECEIVABLE, INSTALLMENT CONTRACTS, SECURITY
AGREEMENTS AND MOTOR VEHICLE TITLES RELATED TO ANY OF THE FOREGOING
VEHICLE LOANS; AND FURNITURE.
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 Credit Concepts, 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 Pacific Continental Bank, its successors
and assigns.
NOTE. The word "Note" means the note or credit agreement dated April 6,
1998, in the principal amount of $3,000,000.00 from Credit Concepts, 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:
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 membership agreement does 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.
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 Oregon, 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. 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.
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. 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 or
intended to protect human health or the environment ("Environmental Laws").
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 Environmental 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, or as a result of
a violation of any Environmental Laws. 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. It 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 and above in the
paragraph titled "Transactions Involving Collateral", 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.
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 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 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 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 with
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 Oregon 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 unless Grantor has signed,
after an Event of Default occurs, a statement renouncing or modifying Grantor's
right to notification of sale. 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 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 Oregon, If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
the State of Oregon. Lender and Grantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Grantor against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
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),
appeal, 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 (unless otherwise required by
law), 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 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 APRIL 6,
1998.
GRANTOR:
CREDIT CONCEPTS, INC.
By: /s/ Tom W. Palmer By: /s/ Eugene C. Albert
------------------------------- --------------------------------
Thomas W. Palmer, President Eugene C. Albert, Secretary
<PAGE>
EXHIBIT 10(j)
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
- -------------------------------------------------------------------------------
THIS COMMERCIAL SECURITY AGREEMENT is entered into between Credit Concepts,
Inc. (referred to below as "Grantor"); and Pacific Continental 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 CHATTEL PAPER, ACCOUNTS AND GENERAL INTANGIBLES, TOGETHER WITH
THE FOLLOWING SPECIFICALLY DESCRIBED PROPERTY: INCLUDING BUT NOT
LIMITED TO THE LIFE INSURANCE POLICY #00868870, ISSUED BY LINCOLN
BENEFIT LIFE INSURANCE INSURING THE LIFE OF THOMAS W. PALMER.
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 accessions, accessories, 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 Credit Concepts, 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 Pacific Continental Bank, its successors
and assigns.
NOTE. The word "Note" means the note or credit agreement dated April 6,
1998, in the principal amount of $3,000,000.00 from Credit Concepts, 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:
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 membership agreement does 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.
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 Oregon, 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. 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.
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. 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 or
intended to protect human health or the environment ("Environmental Laws").
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 Environmental 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, or as a result of
a violation of any Environmental Laws. 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. It 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 and above in the
paragraph titled "Transactions Involving Collateral", 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.
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 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 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 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 with
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 Oregon 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 unless Grantor has signed,
after an Event of Default occurs, a statement renouncing or modifying Grantor's
right to notification of sale. 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 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 Oregon, If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
the State of Oregon. Lender and Grantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Grantor against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
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),
appeal, 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 (unless otherwise required by
law), 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 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 APRIL 6,
1998.
GRANTOR:
CREDIT CONCEPTS, INC.
By: By:
------------------------------ -----------------------------
Thomas W. Palmer, President Eugene C. Albert, Secretary
<PAGE>
EXHIBIT 10(k)
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
- -------------------------------------------------------------------------------
THIS COMMERCIAL SECURITY AGREEMENT is entered into between Credit Concepts,
Inc. (referred to below as "Grantor"); and Pacific Continental 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 CHATTEL PAPER, ACCOUNTS AND GENERAL INTANGIBLES, TOGETHER WITH
THE FOLLOWING SPECIFICALLY DESCRIBED PROPERTY: INCLUDING BUT NOT
LIMITED TO THE LIFE INSURANCE POLICY #00868869, ISSUED BY LINCOLN
BENEFIT LIFE INSURANCE INSURING THE LIFE OF EUGENE C. ALBERT.
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 accessions, accessories, 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 Credit Concepts, 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 Pacific Continental Bank, its successors
and assigns.
NOTE. The word "Note" means the note or credit agreement dated April 6,
1998, in the principal amount of $3,000,000.00 from Credit Concepts, 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:
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 membership agreement does 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.
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 Oregon, 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. 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.
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. 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 or
intended to protect human health or the environment ("Environmental Laws").
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 Environmental 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, or as a result of
a violation of any Environmental Laws. 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. It 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 and above in the
paragraph titled "Transactions Involving Collateral", 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.
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 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 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 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 with
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 Oregon 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 unless Grantor has signed,
after an Event of Default occurs, a statement renouncing or modifying Grantor's
right to notification of sale. 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 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 Oregon, If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Lane County,
the State of Oregon. Lender and Grantor hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Grantor against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
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),
appeal, 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 (unless otherwise required by
law), 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 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 APRIL 6,
1998.
GRANTOR:
CREDIT CONCEPTS, INC.
By: ------------------------------- By: -----------------------------
Thomas W. Palmer, President Eugene C. Albert, Secretary
<PAGE>
EXHIBIT 10(l)
AGREEMENT TO PROVIDE INSURANCE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3,000,000.00 04-06-1998 06-15-1999 43262 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
- -------------------------------------------------------------------------------
INSURANCE REQUIREMENTS. Credit Concepts, 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 and Equipment, including including, but not
limited to, all promissory notes, loans receivable, notes
receivable, installment contracts, security agreements and
motor vehicle titles related to any of the foregoing
vehicle loans; and furniture.
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. $250.00.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender.
PROVISION OF INSURANCE. Grantor agrees to deliver to Lender, ten (10) days
from the date of this Agreement, evidence of the required insurance as provided
above, with an effective date of December 15, 1997, or earlier.
- ------------------------------------------------------------------------------
WARNING
Unless GRANTOR provides Lender with evidence of the insurance coverage as
required by Grantor's security documents, Lender may purchase insurance at
Grantor's expense to protect Lender's interest. This insurance may, but need
not, also protect Grantor's interest. If the collateral becomes damaged, the
coverage Lender purchases may not pay any claim Grantor makes or any claim made
against Grantor. Grantor may Later cancel this coverage by providing evidence
that Grantor s obtained property coverage elsewhere. Grantor will be
responsible for the cost of any insurance purchased by Lender. The cost of
this insurance may be added to Grantor's Indebtedness. If the cost is added to
Grantor's Indebtedness, the interest rate on the underlying Indebtedness will
apply to this added amount. The effective date of coverage may be the date
Grantor's prior coverage lapsed or the date Grantor failed to provide proof of
coverage. The coverage Lender purchases may be considerably more expensive
than insurance Grantor can obtain on Grantor's own and may not satisfy any need
for property damage coverage or any mandatory liability insurance requirements
imposed by applicable law.
- -------------------------------------------------------------------------------
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 APRIL 6,
1998.
GRANTOR:
CREDIT CONCEPTS, INC.
By: /s/ Tom W. Palmer By: /s/ Eugene C. Albert
--------------------------- ---------------------------
Thomas W. Palmer, President Eugene C. Albert, Secretary
- -------------------------------------------------------------------------------
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE:_____________________ PHONE: __________________
AGENT'S NAME: ____________________________________
INSURANCE COMPANY: ______________________________________________________
POLICY NUMBER: _______________________________________________________________
EFFECTIVE DATES: _____________________________________________________________
COMMENTS: ____________________________________________________________________
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10(m)
ASSIGMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. FOR VALUE RECEIVED the undersigned hereby assign, transfer and set over to
PACIFIC CONTINENTAL BANK of Eugene, Oregon, its successors and assigns, (herein
called the "Assignee"), Policy No. 00868870 issued by the ___________________
_____________________ (herein called the "Insurer") and any supplementary
contracts issued in connection therewith (said policy and contracts being
herein called the "Policy"), upon the life of THOMAS W. PALMER, of _________
___________________ and all claims, options, privileges, rights, title and
interest therein and thereunder (except as provided in Paragraph C hereof),
subject to all the terms and conditions of the Policy and to all superior
liens, if any, which the Insurer may have against the Policy. The undersigned
by this instrument jointly and severally agree and the Assignee by the
acceptance of this assignment agrees to the conditions and provisions herein
set forth.
B. It is expressly agreed that, without detracting from the generality of the
foregoing, the following specific rights are included in this assignment and
pass by virtue hereof:
1. The sole right to collect from the insurer the net proceeds of the
Policy when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive the surrender
value thereof at any time provided by the terms of the Policy and at such other
times as the insurer may allow;
3. The sole right to obtain one or more loans or advances on the Policy,
either from the Insurer or, at any time, from other persons, and to pledge or
assign the Policy as security for such loans or advances;
4. The sole right to collect and receive all distributions or shares of
surplus, dividend deposits or additions to the Policy, now or hereafter made or
apportioned thereto, and to exercise any and all options contained in the
Policy with respect thereto; provided, that unless and until the Assignee shall
notify the Insurer in writing to the contrary, the distributions or shares of
surplus, dividend deposits and additions shall continue on the plan in force at
the time of this assignment; and
5. The sole right to exercise all nonforfeiture rights permitted by the
terms of the Policy or allowed by the Insurer and to receive all benefits and
advantages derived therefrom.
C. It is expressly agreed that the following specific rights, so long as the
Policy has not been surrendered, are reserved and excluded from this assignment
and do not pass by virtue hereof:
1. The right to collect from the Insurer any disability benefit payable
in cash that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary;
3. The right to elect any optional mode of settlement permitted by the
Policy or allowed by the Insurer;
but the reservation of these rights shall in no way impair the right of the
Assignee to surrender the Policy completely with all its incidents or impair
any other right of the Assignee hereunder, and any designation or change of
beneficiary or election of a mode of settlement shall be made subject to this
assignment and to the rights of the Assignee hereunder.
D. This assignment is made and the Policy is to be held as collateral
security for any and all liabilities of the undersigned, or any of them, to the
Assignee, either now existing or that may hereafter arise in the ordinary
course of business between any of the undersigned and the Assignee (all of
which liabilities secured or to become secure are herein called "Liabilities").
E. The Assignee covenants and agrees with the undersigned as follows:
1. That any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities, matured or unmatured,
shall be paid by the Assignee to the persons who would have been entitled
thereto under the terms of the Policy had this assignment not been executed;
2. That the Assignee will not exercise either the right to surrender the
Policy or (except for the purpose of paying premiums) the right to obtain
policy loans from the Insurer, until there has been default in any of the
Liabilities or a failure to pay any premium when due, nor until twenty days
after the Assignee shall have mailed, by first-class mail, to the undersigned
at the addresses last supplied in writing to the Assignee specifically
referring to this assignment, notice of intention to exercise such right; and
3. That the Assignee will upon request forward without unreasonable
delay to the Insurer the Policy for endorsement of any designation or change of
beneficiary or any election of an optional mode of settlement.
F. The Insurer is hereby authorized to recognize the Assignee's claims to
rights hereunder without investigating the reason for any action taken by the
Assignee, or the validity or the amount of the Liabilities or the existence of
any default therein, or the giving of any notice under Paragraph E(2) above or
otherwise, or the application to be made by the Assignee of any amounts to be
paid to the Assignee. The sole signature of the Assignee shall be sufficient
for the exercise of any rights under the Policy assigned hereby and the sole
receipt of the Assignee for any sums received shall be a full discharge and
release therefor to the Insurer. Checks for all or any part of the sums
payable under the Policy and assigned herein, shall be drawn to the exclusive
order of the Assignee if, when, and in such amounts as may be, requested by the
Assignee.
G. The Assignee shall be under no obligation to pay any premium, or the
principal of or interest on any loans or advances on the Policy whether or not
obtained by the Assignee, or any other charges on the Policy, but any such
amounts so paid by the Assignee from its own funds, shall become a part of the
Liabilities hereby secured, shall be due immediately, and shall draw interest
at a rate fixed by the Assignee from time to time not exceeding 6% per annum.
H. The exercise of any right, option, privilege, or power given herein to the
Assignee shall be at the option of the Assignee, but (except as restricted by
Paragraph E(2) above) the Assignee may exercise any such right, option,
privilege, or power without notice to, or assent by, or affecting the liability
of, or releasing any interest hereby assigned by the undersigned, or any of
them.
I. The Assignee may take or release other security, may release any party
primarily or secondarily liable for any of the Liabilities, may grant
extensions, renewals or indulgences with respect to the Liabilities, or may
apply to the Liabilities in such order as the Assignee shall determine, the
proceeds of the Policy assigned or any amount received on account of the Policy
by the exercise of any right permitted under this assignment, without resorting
or regard to other security.
J. In the event of any conflict between the provisions of this assignment and
provisions of the note or other evidence of any Liability, with respect to the
Policy or rights of collateral security therein, the provisions of this
assignment shall prevail.
K. Each of the undersigned declares that no proceedings in bankruptcy are
pending against him and that his property is not subject to any assignment for
the benefit of creditors.
SIGNED AND SEALED THIS 11 DAY OF December, 1997.
/s/ Thomas W. Palmer (L.S.)
- ------------------------------------ -------------------------------------
Witness Insured or Owner
Springfield, Oregon 2274 Marie Ln, Eugene, OR 97408
- ------------------------------------ -------------------------------------
Address
Pamela C. Palmer (L.S.)
- ------------------------------------ -------------------------------------
Witness Beneficiary
2274 Marie Ln, Eugene, OR 97408
- ------------------------------------ --------------------------------------
Address
CORPORATE ACKNOWLEDGMENT
STATE OF OREGON )
) ss
COUNTY OF LANE )
On this 11th day of December, 1997, before me, the undersigned Notary Public,
personally appeared THOMAS W. PALMER, to me known to be the individual
described in and who executed the Assignment on the reverse side hereof and
acknowledged to me that ________ he ________ executed the same.
My commission expires June 3, 2001 /s/ Cindy Maples
---------------------------------------
Notary Public
CORPORATE ACKNOWLEDGMENT
STATE OF ______________ )
) ss
COUNTY OF _____________ )
On this ______ day of ________________, 19____, before me personally came
_______________________, who being by me duly sworn, did depose and say that he
resides in ___________________________ that he is the ________________ of
__________________________, the corporation described in and which executed the
assignment on the reverse side hereof; that he knows the seal of said
corporation; that the seal affixed to said assignment is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation,
and that he signed his name thereto by like order.
My commission expires ________________ _______________________________________
Notary Public
Duplicate received and filed at the home office of the Insurer in Lincoln, NE,
this 11th day of December, 1997.
LINCOLN BENEFIT LIFE
By /s/
--------------------------------------
Authorized Officer
NOTE: When executed by a corporation, the corporate seal should be affixed and
there should be attached to the assignment a certified copy of the resolution
of the Board of Directors authorizing the signing officer to execute and
deliver the assignment in the name and on behalf of the corporation.
RELEASE OF ASSIGNMENT OF LIFE INSURANCE POLICY
FOR VALUE RECEIVED, all right, title and interest of the undersigned assignee
in and to Policy No. ________________ issued by ______________________ on the
Life of _____________________ is hereby relinquished and released.
CORPORATE SEAL NAME OF BANK
By: __________________________________
Attest: ___________________________ Signature and Title
Signature and Title
CORPORATE ACKNOWLEDGMENT
STATE OF ______________ )
) ss
COUNTY OF _____________ )
On this ______ day of ________________, 19____, before me personally came
_______________________ of ______________________ and __________________ of
________________________________, to me known, who, being by me duly sworn, did
jointly and severally depose and say that they are respectively the
_____________________ and ______________________ of the ______________________,
the Corporation described in and which executed the foregoing instrument; that
they know the seal of said Corporation; that the seal affixed to this
assignment is said corporate seal; and that they have signed their names to
said instrument and caused said corporate seal to b affixed thereto as to the
act and deed of said Corporation.
My commission expires ________________ _______________________________________
Notary Public
<PAGE>
EXHIBIT 10(n)
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1,500,000.00 03-10-1998 06-15-1999 43166 4 330 SCA
- -------------------------------------------------------------------------------------------------------
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: Credit Concepts, Inc. LENDER: Pacific Continental Bank
2149 Centennial Plaza, Suite 2 P.O. Box 10727
Eugene, OR 97401 Eugene, OR 97440
- -------------------------------------------------------------------------------
A. FOR VALUE RECEIVED the undersigned hereby pledges, collaterally assigns,
transfers, delivers and sets over to and in favor of PACIFIC CONTINENTAL BANK
of Eugene, Oregon, its successors and assigns, (herein called the "Assignee"),
in LIFE INSURANCE POLICY NUMBER 00868869 ISSUED BY LINCOLN BENEFIT LIFE
INSURANCE (herein called the "Insurer") and any supplementary contracts issued
in connection therewith (said policy and contracts herein call the "Policy"),
upon the life of EUGENE C. ALBERT, and all claims, options, privileges, rights,
title and interest therein and thereunder (except as provided in Paragraph C
hereof), subject to all the terms and conditions of the Policy and to all
superior liens, it any, which the Insurer may have against the Policy. The
undersigned by this instrument jointly and severally agree, and the Assignee by
the acceptance of this assignment agrees, to the conditions and provisions
herein set forth.
B. It is expressly agreed that, without detracting from the generality of the
foregoing, the following specific rights are included in this assignment and
pass by virtue hereof:
1. The sole right to collect from the insurer the net proceeds of the
Policy when it becomes a claim by death or maturity;
2. The sole right to surrender the Policy and receive the surrender
value thereof at any time provided by the terms of the Policy and at such other
times as the insurer may allow;
3. The sole right to obtain one or more loans or advances on the Policy
at any time, either from the Insurer or from other persons, and to pledge or
assign the Policy as security for such loans or advances;
4. The sole right to collect and receive all distributions or shares of
surplus, dividend deposits or additions to the Policy, now or hereafter made or
apportioned thereto, and to exercise any and all options contained in the
Policy with respect thereto; provided that, unless and until the Assignee shall
notify the Insurer in writing to the contrary, the distributions or shares of
surplus, dividend deposits and additions shall continue on the plan in force at
the time of this assignment; and
5. The sole right to exercise all nonforfeiture rights permitted by the
terms of the Policy or allowed by the Insurer and to receive all benefits and
advantages derived therefrom.
C. It is expressly agreed that the following specific rights, so long as the
Policy has not been surrendered, are reserved and excluded from this assignment
and do not pass by virtue hereof:
1. The right to collect from the Insurer any disability benefit payable
in cash that does not reduce the amount of insurance;
2. The right to designate and change the beneficiary; and
3. The right to elect any optional mode of settlement permitted by the
Policy or allowed by the Insurer;
however, the reservation of these rights shall in no way impair the right of
the Assignee to surrender the Policy completely with all its incidents or
impair any other right of the Assignee hereunder, and any designation or change
of beneficiary or election of a mode of settlement shall be made subject to
this assignment and to the rights of the Assignee hereunder.
D. This assignment is made and the Policy is to be held as collateral
security for any and all present and future liabilities of the undersigned. or
any of them, to the Assignee, of every nature and kind, whether now existing or
that may hereafter arise in the ordinary course of business between any of the
undersigned and the Assignee, together with interest, costs, expenses,
attorneys' fees, and other fees and charges (all of which liabilities secured
or to become secured are herein individually, collectively and interchangeably
called "Liabilities").
E. The Assignee covenants and agrees with the undersigned as follows:
1. That any balance of sums received hereunder from the Insurer
remaining after payment of the then existing Liabilities, matured or unmatured,
shall be paid by the Assignee to the persons who would have been entitled
thereto under the terms of the Policy had this assignment not been executed;
2. That the Assignee will not exercise either the right to surrender the
Policy or (except for the purpose of paying premiums) the right to obtain
policy loans from the Insurer, until there has been default in any of the
Liabilities or a failure to pay any premium when due, nor until twenty days
after the Assignee shall have mailed, by first-class mail, to the undersigned
at the address last supplied in writing to the Assignee specifically referring
to this assignment, notice of intention to exercise such right; and
3. That the Assignee will upon request forward the Policy without
unreasonable delay to the Insurer for endorsement of any designation or change
of beneficiary or any election of an optional mode of settlement.
F. The Insurer is hereby authorized to recognize the Assignee's claims to
rights hereunder without investigating the reason for any action taken by the
Assignee, or the validity or the amount of the Liabilities or the existence of
any default therein, or the giving of any notice under Paragraph E(2) above or
otherwise, or the application to be made by the Assignee of any amounts to be
paid to the Assignee. The sole signature of the Assignee shall be sufficient
for the exercise of any rights under the Policy assigned hereby and the sole
receipt of the Assignee for any sums received shall be a full discharge and
release therefor to the Insurer. Checks for all or any part of the sums
payable under the Policy and assigned herein shall be drawn to the exclusive
order of the Assignee if, when, and in such amounts. as may be requested by the
Assignee.
G. The Assignee shall be under no obligation to pay any premium, or the
principal of or interest on any loans or advances on the Policy whether or not
obtained by the Assignee, or any other charges on the Policy, but any such
amounts so paid by the Assignee from its own funds shall become a part of the
Liabilities hereby secured, shall be due immediately, and shall bear interest
at the lower of (a) the highest interest rate of any promissory note evidencing
a liability from Borrower to Assignee or (b) the highest rate permitted by
applicable law, from the date of each such advance unfit Assignee is repaid in
full.
H. The exercise of any right, option, privilege, or power given herein to the
Assignee shall be at the option of the Assignee, but (except as restricted by
Paragraph E(2) above) the Assignee may exercise any such right, option,
privilege, or power without notice to, or assent by. or affecting the liability
of, or releasing any interest hereby assigned by, the undersigned, or any of
them.
I. The Assignee may take or release other security, may release any party
primarily or secondarily liable for any of the Liabilities, may grant
extensions, renewals or Indulgences with respect to the Liabilities, or may
apply to the Liabilities in such order as the Assignee shall determine, the
proceeds of the Policy assigned or any amount received on account of the Policy
by the exercise of any right permitted under this assignment, without resorting
or regard to other security.
J. In the event of any conflict between the provisions of this assignment and
provisions of the note or other evidence of any Liability, with respect to the
Policy or rights of collateral security therein, the provisions of this
assignment shall prevail.
K. Each of the undersigned declares that no proceedings in bankruptcy are
pending against him or her and that his or her property is not subject to any
assignment for the benefit of creditors.
SIGNED AND SEALED THIS 10TH DAY OF MARCH, 1998.
/s/ /s/ Eugene C. Albert
- ------------------------------------ -------------------------------- (L.S.)
Witness Insured or Owner
2149 Centennial Plaza, #2, Eugene, Or
- ------------------------------------ ---------------------------------------
Address
- ------------------------------------ -------------------------------- (L.S.)
Witness Beneficiary
- ------------------------------------ ---------------------------------------
Address
===============================================================================
CORPORATE ACKNOWLEDGMENT
STATE OF OREGON )
) ss
COUNTY OF LANE )
On this 9th day of March, 1998, before me, the undersigned Notary Public,
personally appeared THOMAS W. PALMER, PRESIDENT; AND EUGENE C. ALBERT,
SECRETARY OF CREDIT CONCEPTS, INC., and known to me to be authorized agents of
the corporation that executed the Assignment of Life Insurance Policy as
Collateral and acknowledged the assignment to be the free and voluntary act and
deed of the corporation, by authority of its Bylaws or by resolution of its
board of directors, for the uses and purposes therein mentioned, and on oath
stated that they are authorized to execute this assignment and in fact executed
the assignment on behalf of the corporation.
By /s/ Residing at Springfield
----------------------------- -----------------------
Notary Public in and for the My commission expires 12-14-2001
State of Oregon
===============================================================================
ACKNOWLEDGMENT OF ASSIGNMENT BY INSURER
LINCOLN BENEFIT LIFE INSURANCE hereby acknowledges receipt of a duplicate of
this Assignment of Life Insurance Policy Number 00868869, which has been filed
at the home office of Lincoln Benefit Life Insurance on this 5th day of
February, 1998.
LINCOLN BENEFIT LIFE INSURANCE
By: /s/
----------------------------------
Authorized Officer
===============================================================================
RELEASE OF ASSIGNMENT OF LIFE INSURANCE POLICY
FOR VALUE RECEIVED, all right, title and interest of the undersigned assignee
(Pacific Continental Bank) in and to Life Insurance Policy Number 00868869
issued by Lincoln Benefit Life Insurance on the Life of Eugene C. Albert is
hereby relinquished and released.
CORPORATE SEAL PACIFIC CONTINENTAL BANK
By: __________________________________
Attest: ___________________________ Signature and Title
Signature and Title
===============================================================================
<PAGE>
EXHIBIT 10(o)
EMPLOYMENT AGREEMENT
DATE: September 24 , 1997
PARTIES: Credit Concepts, L.L.C., an
Oregon Limited Liability Company (hereafter "the Company")
Kimberly Coleman (hereafter "Coleman")
RECITALS:
A. The Company has been formed for the purpose of engaging in the
business of purchasing retail installment contracts;
B. The Company desires to employ and retain the unique experience,
abilities, and services of Coleman to manage the business of the Company;
C. Coleman desires to become employed by the Company.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions contained herein to be kept and performed, IT IS
AGREED:
SECTION 1. EMPLOYMENT
1.1 TERM. The Company agrees to employ Coleman for a term
commencing on September 15, 1997, or at such later time as the Company
receives approval and commitment for financing from its bank, and continuing
for a period of five years, or until termination in accordance with Section 5.
1.2 DUTIES. Coleman accepts employment with the Company on the
terms and conditions set forth in this Agreement, and agrees to devote her
full time and attention to the performance of her duties under this Agreement.
Coleman shall perform such specific duties and shall exercise such specific
authority as may be assigned to Coleman from time to time by the Members of
the Company. In performing such duties, Coleman shall be subject to the
direction and control of the Members of the Company. Coleman further agrees
that she shall perform her duties faithfully, intelligently, and to the best
of her ability, and in the best interest of the Company.
SECTION 2. COVENANT NOT TO COMPETE
2.1 NONCOMPETITION. During the term of this Agreement, and for a
period of two years after the termination of employment with the Company for
any reason except for termination by the Company pursuant to Section 5.1 or
termination by expiration of the 5 year term of this Agreement, Coleman shall
not, within Lane, Linn, Benton, Marion, and/or Douglas Counties, Oregon,
directly or indirectly, (1) own as a proprietor, partner, shareholder, member,
or own an interest in; or (2) participate as an officer, director, or in any
other capacity in the management, operation, or control of; or (3) perform
services as or act in the capacity of an employee, independent contractor, or
consultant in any business that competes with a business conducted by the
Company on the date that Coleman's employment with the Company terminates for
any reason.
2.2 INJUNCTION. Coleman agrees that it would be difficult to
measure damage to the Company from any breach by Coleman of Section 2.1, and
that monetary damages would be an inadequate remedy for any such breach.
Accordingly, Coleman Agrees that if Coleman shall breach Section 2.1, the
Company shall be entitled, in addition to all other remedies it may have at
law or in equity, to an injunction or other appropriate orders to restrain any
such breach, without showing or proving any actual damage sustained by the
Company.
SECTION 3. COMPENSATION
3.1 BASE COMPENSATION. In consideration of all services rendered
by Coleman to the Company, the Company shall pay base compensation to Coleman
the following amounts:
<TABLE>
<CAPTION>
YEAR COMPENSATION
---- ------------
<S> <C> <C>
1 $48,000.00 per year
2 48,000.00 per year
3 54,000.00 per year
4 54,000.00 per year
5 60,000.00 per year
</TABLE>
The foregoing compensation shall be payable in monthly installments.
3.2 BONUS COMPENSATION. As additional compensation, the Company
shall pay bonus compensation to Coleman each year, as follows:
3.2.1 For year 1, a bonus equal to .85% of loans receivable booked
in the first year of Coleman's employment provided that the foregoing amount
shall not exceed the gross amount of $15,000.00.
3.2.2 For year 2, a bonus equal to .85% of loans receivable booked
in the second year of Coleman's employment provided that the foregoing amount
shall not exceed the gross amount of $20,000.00.
3.2.3 For years 3, 4 and 5, an amount equal to 6% of the net
profits from the operations of the Company after all chargeoffs. The formula
for determining the net profit of the Company shall be mutually agreed upon by
the Company and Coleman hereafter.
3.2.4 The bonus compensation referenced herein shall be paid semi-
annually. Calculation of the bonus due after six months of each year shall be
calculated based upon the volume of loans receivable or the net profits then
existing. The bonus compensation payable at the end of each year shall
account for the bonus compensation paid at the end of six months.
3.2.5 In the event Coleman's employment is terminated pursuant to
Section 5, Coleman shall be entitled to receive bonus compensation which shall
be prorated based upon the period of actual service by Coleman.
3.3 WITHHOLDING. Base compensation and bonus compensation shall be
subject to customary withholding of income taxes, and shall be subject to
other employment taxes required with respect to compensation paid by a
corporation to an employee.
4. EXPENSES
Coleman shall be entitled to reimbursement from the Company for
reasonable expenses necessarily incurred by Coleman in the performance of
Coleman's duties under this Agreement, upon presentation of vouchers
indicating in detail the amount and business purpose of each such expense.
5. TERMINATION
5.1 TERMINATION BY PRIOR NOTICE. The employment of Coleman by the
Company may be terminated by either the Company or by Coleman upon the giving
of 15 days prior notice to the other party.
5.2 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be
terminated at any time upon the mutual written agreement of the Company and
Coleman.
5.3 IMMEDIATE TERMINATION. Employment of Coleman by the Company
may be terminated immediately in the sole discretion of the Members of the
Company upon the occurrence of any one of the following events:
5.3.1 In the event Coleman shall willfully and continuously fail or
refuse to comply with the policies, standards or regulations of the Company
from time to time established.
5.3.2 In the event Coleman shall be guilty of fraud, dishonesty, or
any intentional misconduct in the performance of Coleman's duties on behalf of
the Company.
5.3.3 In the event Coleman shall suffer a disability. For purposes
of this Agreement, "disability" shall be defined as Coleman's inability due to
physical or mental illness, or other cause, to perform the majority of
Coleman's usual duties for a period of not less than 3 consecutive months.
SECTION 6. SEVERANCE PAY
In the event the Company elects to terminate Coleman's employment
without cause pursuant to Section 5.1, the Company shall pay to Coleman as
severance pay a total of 3 months pay at Coleman's then current salary, less
all amounts that are required to be withheld and deducted.
SECTION 7. VACATION
Subject to approval of time by the Company, Coleman shall be
entitled to one or more vacations totaling 10 working days in each year of
service provided, however, that Coleman shall not be entitled to take vacation
time during her first year of employment until after 8 months of service.
Coleman shall be entitled to one or more vacations totaling 15 working days
during her third, fourth, and fifth year of service.
SECTION 8. MISCELLANEOUS
8.1 DEFINITION. As used herein, the terms "year", "each year" or
"year of service" shall refer to a term beginning either on the original date
or anniversary date of employment and continuing for 365 days.
8.2 ATTORNEY FEES. In the event suit or action is filed to enforce
or interpret any of the provisions of this Agreement, the prevailing party
shall be entitled to recover from the other party all reasonable attorney fees
incurred at trial and on appeal.
8.3 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements, whether oral or written, between the parties
with respect to the subject matter.
Credit Concepts, L.L.C., an
Oregon Limited Liability Company
By: /s/ Tom W. Palmer /s/ Kimberly M. Coleman
------------------------------ --------------------------
Member Kimberly M. Coleman
<PAGE>
EXHIBIT 10(p)
BUY-SELL AGREEMENT
EFFECTIVE DATE: January 20, 1998
PARTIES:
TED W. PALMER, Trustee,
THOMAS W. PALMER, and
EUGENE C. ALBERT (hereafter "Shareholders")
CREDIT CONCEPTS, INC., (hereafter "Corporation")
an Oregon corporation
RECITALS:
A. This Agreement is made with respect to all of the Corporation's
capital stock, now or hereafter outstanding ("shares"), for the purpose of
protecting the Corporation and the Shareholders in the event of a purchase of
the shares of any Shareholder as provided for in this Agreement;
B. The Shareholders together own all the outstanding shares of the
Corporation's stock as follows:
<TABLE>
<CAPTION>
Shareholders Number of Shares
------------ ----------------
<S> <C> <C>
TED W. PALMER, Trustee 100
THOMAS W. PALMER 100
EUGENE C. ALBERT 100
</TABLE>
C. It is the intent of all parties hereto that any additional shares of
the Corporation's capital stock hereafter purchased, or otherwise acquired by a
Shareholder, shall be subject to this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
covenants and conditions contained herein to be kept and performed, IT IS
AGREED:
SECTION 1. RESTRICTIONS ON TRANSFER OR ENCUMBRANCE
1.1 No Shareholder shall transfer his shares in the Corporation, or any
portion thereof, except as expressly permitted by this Agreement. For purposes
of this Agreement, "transfer" shall be construed as broadly as the law shall
allow, and shall include any change of legal or beneficial ownership with
respect to such shares.
1.2 No Shareholder shall encumber his shares in the Corporation, or any
portion thereof, without the written consent of all other Shareholders. For
purposes of this Agreement, "encumber" shall be construed as broadly as the law
shall allow, and shall include voluntary action by a Shareholder in pledging a
security interest in such shares or an assignment for the benefit of creditors
or involuntary action against a Shareholder, including execution upon or
attachment of shares by any creditor.
1.3 Any purported transfer or encumbrance not permitted under this
Agreement shall be null and void and of no force or effect whatsoever. Any
Shareholder engaging or attempting to engage in a transfer or encumbrance or
attempted transfer or encumbrance not permitted under this Agreement shall
indemnify and hold harmless the Corporation and other Shareholders from all
costs, liability and damage that any of the indemnified parties may incur as a
result of such transfer or encumbrance or attempt to transfer or encumber the
shares and enforcement of the foregoing indemnity.
SECTION 2. PERMITTED TRANSFERS
2.1 Subject to the conditions and restrictions set forth in Section 2.2
hereof, a Shareholder may, at any time, transfer all or any portion of the
Shareholder's interest in the Corporation to:
2.1.1 Any other Shareholder;
2.1.2 The Transferor's trustee to whom such shares may be
transferred during the Shareholder's lifetime;
2.1.3 To any person or entity with the written consent of all of
the other Shareholders;
2.1.4 To any person or entity in accordance with Section 3.
2.2 A transfer shall not be treated as a permitted transfer under Section
2 hereof unless and until the following conditions are satisfied:
2.2.1 The Transferor and Transferee shall execute and deliver to
the Corporation such documents and instruments of conveyance as may be
necessary or appropriate in the opinion of counsel to the Corporation to effect
such transfer;
2.2.2 The Transferee must execute a counterpart copy of this
Agreement, as amended, pursuant to which the Transferee agrees to be bound by
the provisions of this Agreement, as amended;
2.2.3 The Transferee must agree to take all action necessary and
appropriate to continue the election to be taxed as a Subchapter S Corporation.
SECTION 3. PERMITTED LIFETIME TRANSFERS - RIGHT OF FIRST REFUSAL
3.1 Except as otherwise permitted by Section 2 hereof, no Shareholder
shall transfer all or any portion of his shares in the Corporation (the
"Offered Shares") unless such Shareholder (the "Transferor") first offers to
sell the Offered Shares pursuant to the terms of this Section 3.
3.1.1 No transfer may be made under this Section 3 unless the
Transferor has received a bona fide written offer (the "Purchase Offer") from a
person (the "Transferee") to purchase the Offered Shares for a purchase price
(the "Offer Price") according to specified terms, with or without interest,
which offer shall be in writing signed by the Transferee and shall be
irrevocable for a period ending no sooner than the day following the end of the
Offer Period, as hereinafter defined.
3.1.2 Prior to making any transfer that is subject to the terms
of this Section 3, the Transferor shall give to the Corporation and each
Shareholder written notice (the "Offer Notice") which shall include a copy of
the Purchase Offer and an offer (the "Firm Offer") to sell the Offered Shares
to the Corporation and the other Shareholders (the "Other Shareholders") for
the Offer Price, payable according to the same terms as (or more favorable
terms than) those contained in the Purchase Offer, provided that the Firm Offer
shall be made without regard to the requirement of any earnest money or similar
deposit required of the Transferee prior to closing, and without regard to any
security (other than the Offered Shares) to be provided by the Transferee for
any deferred portion of the Offer Price.
3.1.3 The Firm Offer shall be irrevocable for a period of 90 days
following the day of the Offer Notice.
3.1.4 At any time during the first 30 days of the Offer Period,
the Corporation may accept the Firm Offer as to all or any portion of the
Offered Shares, by giving written notice of such acceptance to the Transferor
and the Other Shareholders, which notice shall indicate the maximum portion of
the Offered Shares that the Corporation is willing to purchase. If the
Corporation does not notify the Other Shareholders of a willingness to acquire
all of the Offered Shares, at any time during the remainder of the Offer
Period, any Other Shareholders may accept the Firm Offer as to all or any
portion of the Offered Shares not accepted by the Corporation, by giving
written notice of such acceptance to the Transferor and the Corporation, which
notice shall indicate the maximum portion of the remaining Offered Shares that
the Other Shareholders are willing to purchase. In the event that the
Corporation and the Other Shareholders ("Accepting Shareholders"), in the
aggregate, indicate a willingness to accept the Firm Offer as to the entire
Offered Shares, the Firm Offer shall be deemed to be accepted and each
Accepting Shareholder shall be deemed to have accepted that portion of the Firm
Offer that was not accepted by the Corporation. In such event, each Accepting
Shareholder shall have the right to purchase that number of shares owned by the
offering Shareholder, equal to the ratio of the number of shares owned by the
Other Shareholders to the aggregate number of shares owned by the Other
Shareholders, but in the event the Accepting Shareholder indicates a
willingness to acquire less than the Accepting Shareholder's full share, any
unaccepted portion shall be deemed accepted by the other Accepting Shareholders
who indicated a willingness to acquire more than their proportionate share and
accepted in proportion to a similar ratio, but as before limited by their
indications of the maximum amount they are willing to acquire. If the
Corporation and the Accepting Shareholders do not accept the Firm Offer as to
all of the Offered Shares during the Offer Period, the Firm Offer shall be
deemed to be rejected in its entirety.
3.1.5 In the event that the Firm Offer is accepted, the closing
of the sale of the Offered Shares shall take place within 30 days after the
Firm Offer is accepted or, if later, the date of closing set forth in the
Purchase Offer. The Transferor, the Corporation and all Accepting Shareholders
shall execute such documents and instruments as may be necessary or appropriate
to effect the sale of the Offered Shares pursuant to the terms of the Firm
Offer and this Section 3.
3.1.6 If the Firm Offer is not accepted in the manner hereinabove
provided, the Transferor may sell the Offered Shares to the Transferee at any
time within 60 days after the last day of the Offer Period, provided that such
sale shall be made on terms no more favorable to the Transferee than the terms
contained in the Purchase Offer and provided the following conditions are
satisfied:
(a) The Transferee shall execute a counterpart copy of this Agreement, as
amended, pursuant to which the Transferee agrees to be bound by the provisions
of this Agreement, as amended;
(b) The Transferor and/or Transferee have reimbursed the Corporation for
all costs and expenses that the Corporation reasonably incurs in connection
with the transfer; and
(c) The Transferor and Transferee have provided to the Corporation the
Transferee's tax identification number and any other information reasonably
necessary to permit the Corporation to file all required federal and state
returns and other legally required information, statements or returns. In the
event that the Offered Shares are not sold in accordance with the terms of the
preceding sentence, the Offered Shares shall again become subject to all of the
conditions and restrictions of this Section 3.
SECTION 4. PURCHASE ON DEATH
Within a period commencing with the death of any Shareholder and ending
180 days following the qualification of the Shareholder's personal
representative, the remaining Shareholders shall purchase all the decedent's
shares of the Corporation's capital stock at the price and on the terms
provided in this Agreement. The obligation of the remaining Shareholders to
purchase such shares shall be several and not joint and shall be pro rata based
on their respective shareholdings in the Corporation.
SECTION 5. BANKRUPTCY
In the event any Shareholder commences a voluntary case under the federal
bankruptcy laws or permits the entry of a decree of order for relief against
such Shareholder in an involuntary case under the federal bankruptcy laws, or
makes an assignment for the benefit of creditors, the remaining Shareholders
shall have the option for a period of 180 days following notice of such event
to purchase all or any part of the Shares owned by the Shareholder. The option
shall be exercisable by the remaining Shareholders, and the price, terms of
purchase, and method of exercise of the option shall be the same as provided
hereafter, except that written notice of the exercise of such option shall be
given to the Shareholder or such Shareholder's successor in interest. In the
event this option is not exercised as to all the shares owned by the
Shareholder, the Shareholder or the Shareholder's successor in interest will
hold the shares subject to the provisions of this Agreement.
SECTION 6. DISABILITY
6.1 In the event any Shareholder becomes disabled, remaining Shareholders
shall have the option for a period of 180 days following notice that such
Shareholder is disabled (as defined in Section 6.2) to purchase all or any part
of the Shares owned by the Shareholder. The option shall be exercisable by the
remaining Shareholders, and the price, terms of purchase, and method of
exercise of the option shall be the same as provided hereafter, except that
written notice of such option shall be given to the Shareholder or such
Shareholder's successor in interest. In the event this option is not exercised
as to all the shares owned by the Shareholder, the Shareholder or the
Shareholder's successor in interest will hold the shares subject to the
provisions of this Agreement.
6.2 For purposes of this Agreement a Shareholder shall be deemed to be
"disabled" (1) if the Shareholder suffers from any physical or mental disease,
condition, disorder, injury, or abuse of substances hazardous to health
(including alcohol and drugs), or mental illness and (2) if one of the
following conditions is satisfied:
6.2.1 Under the terms of a bona fide disability income insurance
policy that insures the Shareholder, the insurance company that underwrites
such insurance policy determines that the Shareholder is totally disabled for
purposes of such insurance policy; or
6.2.2 A physician licensed to practice medicine in the state of
Oregon, who has been selected by the Shareholder (or the conservator of the
Shareholder's estate) and the board of directors of the Corporation, certifies
that the Shareholder is partially or totally disabled so that the Shareholder
will be unable to be employed gainfully on a fulltime basis by the Corporation
for a six month period in the position that the Shareholder occupied before
such disability. The costs and expenses of such physician shall be borne by
the Corporation; or
6.2.3 The Shareholder and the board of directors of the
Corporation agree in writing that the Shareholder is partially or totally
disabled so that the Shareholder will be unable to be employed gainfully on a
fulltime basis by the Corporation for a
six month period in the position that the Shareholder occupied before the
disability.
SECTION 7. DIVORCE
In the event of the dissolution of the marriage of any Shareholder, the
remaining Shareholders shall have the option for a period of 180 days following
entry of the Judgment and Decree of Dissolution of Marriage to purchase all or
any part of the shares owned by the Shareholder. The option shall be
exercisable by the remaining Shareholders, and the price, terms of purchase,
and method of exercise of the option shall be the same as provided hereafter,
except that written notice of the exercise of such option shall be given to the
Shareholder or such Shareholder's successor in interest. In the event this
option is not exercised as to all the shares owned by the Shareholder, the
Shareholder or the Shareholder's successor in interest will hold the shares
subject to the provisions of this Agreement.
SECTION 8. VALUATION
The purchase price for the shares to be sold and purchased pursuant to
Sections 4, 5, 6 and 7, shall be determined by agreement of the parties. In
the event the parties are unable to agree upon value within 30 days of the
occurrence of the event requiring determination of the purchase price, then the
value shall be determined by appraisal. In the event an appraisal is required,
the accountant for the Corporation shall select a qualified appraiser to
appraise the Corporation and determine the value of the shares to be sold and
purchased within 60 days after the occurrence of the event requiring the
determination of the purchase price. The appraisal fees shall be split with
one-half to be paid by the selling Shareholder and one-half to be paid by the
remaining Shareholders. In making the appraisal, the appraiser shall value
real estate at fair market value; office equipment shall be valued at
replacement cost or fair market value, whichever is lower; receivables shall be
valued at their face amount, minus an allowance for uncollectible items that is
reasonable in view of the past experience of the Corporation, and a recent
review of their collectibility; and all liabilities shall be deducted at their
face value, and a reserve for contingent liability shall be established, if
appropriate.
SECTION 9. PAYMENT TERMS
9.1 Unless otherwise agreed, the purchase price for shares purchased and
sold under this Agreement shall be paid as follows:
9.1.1 A downpayment equal to 20% of the purchase price shall be
paid on the date on which the remaining Shareholders purchase the shares;
9.1.2 The balance of the purchase price shall be paid in 60 equal
monthly installments, including interest at the rate of 9% per annum. Such
installments shall commence on the first day of the month next following the
date on which the remaining Shareholders purchase the shares, and like payments
shall be made on the first day of each month thereafter until the purchase
price may be prepaid without penalty at any time. The purchase price for the
shares shall be paid to the selling Shareholder or such Shareholder's estate,
as the case may be.
9.2 The deferred portion of the purchase price for any shares purchased
under this Agreement shall be evidenced by a promissory note executed by the
remaining Shareholders providing for joint and several liability. Each maker
shall agree to pay maker's pro rata portion of each installment of principal
and interest as it falls due. The note shall provide that, in the case of
default, at the election of the holder, the entire sum of principal and
interest will immediately be due and payable, and that the makers shall pay
reasonable attorney fees to the holder in the event suit is commenced because
of default. The note shall be secured by a pledge of all the shares being
purchased by the remaining Shareholders in the transaction to which the note
relates. The pledge agreement shall contain such terms and provisions as may
be customary and reasonable. As long as no default occurs in payments on the
note, the purchase Shareholders shall be entitled to vote the shares; however,
dividends shall be paid to the holder of the note as a prepayment of principal.
The purchasing Shareholders shall expressly waive demand, notice of default,
and notice of sale, and shall consent to public or private sale of the shares
in the event of default, and the selling Shareholder shall have the right to
purchase at the sale.
9.3 Upon the exercise of any option under this Agreement and in all other
events, consideration of the shares shall be delivered as soon as practicable
to the person entitled to it. The secretary of the Corporation shall cause the
certificates representing the purchased shares to be properly endorsed and
shall issue a new certificate in the name of each purchasing Shareholder.
SECTION 10. LEGENDS ON SHARE CERTIFICATES
Each certificate representing shares of capital stock of the Corporation
now or hereafter held by the Shareholders shall be inscribed substantially as
follows:
"SALE, TRANSFER, PLEDGE OR ANY OTHER DISPOSITION OF THE SHARES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO AND RESTRICTED BY THE TERMS OF A BUY-SELL
AGREEMENT DATED EFFECTIVE JANUARY 20, 1998, BETWEEN THE CORPORATION AND ITS
SHAREHOLDERS, OF WHICH THE REGISTERED HOLDER OF THIS CERTIFICATE IS A PARTY. A
COPY OF THE BUY-SELL AGREEMENT IS AVAILABLE AT THE OFFICE OF THE CORPORATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH THE BUY-SELL AGREEMENT."
SECTION 11. ACQUISITION OF ADDITIONAL SHARES BY A SHAREHOLDER
In the event that any Shareholder acquires additional shares of the
Corporation, all such shares acquired shall be subject to all of the terms and
conditions of this Agreement.
SECTION 12. TERMINATION OF AGREEMENT
This Agreement shall terminate on:
12.1 The written agreement of all parties;
12.2 The dissolution, bankruptcy, or insolvency of the Corporation; or
12.3 At such time as only one Shareholder remains, the shares of the other
Shareholder having been transferred or redeemed.
SECTION 13. EQUITABLE RELIEF IN THE EVENT OF BREACH
The shares of the Corporation to this Agreement are unique, cannot be
readily purchased or sold because of the lack of a market, and for these
reasons, among others, the parties will be irreparably damaged in the event
this Agreement is breached. Any party aggrieved by a breach of the provisions
of this Agreement may bring an action at law, or a suit in equity to obtain
redress, including specific performance, injunctive relief, or any other viable
equitable remedy. Time and strict performance are of the essence of this
Agreement. Such remedies shall be cumulative and not exclusive, and shall be
in addition to any other remedy which the parties may have.
SECTION 14. ATTORNEY FEES
In the event a suit or action is filed to enforce this Agreement or with
respect to this Agreement, the prevailing party shall be entitled to recover
its reasonable attorney fees at the trial level and on appeal.
SECTION 15. WAIVER
No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
SECTION 16. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective Personal Representatives, heirs, successors and
permitted assigns.
SECTION 17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof, and supersedes and replaces all prior
agreements relating to such subject matter.
SHAREHOLDERS: CORPORATION:
TED W. PALMER TRUST CREDIT CONCEPTS, INC.
By:________________________ By:______________________________
TED W. PALMER, Trustee Title
By:________________________ By:______________________________
THOMAS W. PALMER Title
__________________________
EUGENE C. ALBERT
<PAGE>
EXHIBIT 10(q)
LEASE AGREEMENT
This lease agreement, made and entered into by and between Keypac Leasing,
hereinafter referred to as "Lessor" and Credit Concepts L.L.C., hereinafter
referred to as "Lessee", WITNESSETH:
Lessor leases to Lessee an office building commonly known as
2149 Centennial Plaza, Eugene, Oregon 97401. The office space which is the
subject of this lease consists of approximately 1,310 square feet.
1. TERM: This lease shall run for a period of three (3) years commencing
upon the 1st day of November 1997, and terminating on the 31st day of October,
2000.
2. Purpose: Lessee shall use and occupy the leased premises for the purpose
of general office duties and for no other business or purpose without the
written consent of Lessor.
3. Rent: The Lessee shall pay to Lessor as rent the sum of:
Year 1 ($1,244.50 per month) (first month free)
Year 2 ($1,269.39 per month)
Year 3 ($1,320.16 per month)
Rent shall be payable on the first day of each month in advance at such
place as may be designated by Lessor.
4. Utilities: Utilities used by Lessee shall be paid for by Lessor as
follows: Water, Gas, Electricity, Janitor (three times each week), Sewer and
Garbage. All other utilities shall be supplied and paid for by Lessee.
5. Possession: Lessee's right to possession and obligations under this lease
shall begin on commencement of the term of this lease, or on such other date as
the premises are available.
6. Compliance With Law: Lessee agrees to conform with all applicable laws
and regulations of a public authority affecting the premises and its use, and
to correct at Lessee's own expense any failure of compliance created through
Lessee's faults or by reason of Lessee's use. Lessee agrees to comply with any
reasonable rules respecting the use of the premises promulgated by Lessor from
time to time and communicated to the Lessee in writing, including, but not
limited to, rules governing signs and outdoor advertising.
7. Repairs: Lessor shall maintain the outside of the building in good order
and repair during the terms of the Lease and shall make all repairs to the
building required by any act of God or damage from weather. Lessor's
obligation to repair shall not commence until it has received notice from
Lessee of any necessary repair. It shall be Lessor's duty to make repairs
relating to the interior of the premises, including, but not limited to all
glass, doors, (including exterior glass and doors), heat, air conditioning,
electrical (including lamps and bulbs) and plumbing unless such repairs are
made necessary by Lessee's willful or negligent act. Lessee shall make no
improvements, remodeling or redecorating without first obtaining Lessor's
written consent, which may not be unreasonably withheld. Lessee may place one
sign on the door or outside wall of Lessee's rental space and one sign on the
S.W. corner of the building under the existing attorneys sign, size and exact
location to be determined with Lessor prior to installation.
8. Parking: Lessor agrees to provide 3 reserved parking spaces and one
designated "visitor" which is not to be used for employee parking to serve the
leased premises.
9. Assignment and Sublease: No part of the leased premises may be assigned,
mortgaged, or subleased, nor may a right of use of any portion of any property
be conferred on any third person by any other means, without the prior written
consent of Lessor.
10. Insurance: Lessor's insurance obligations are fire and extended coverage
on building only. Lessee agrees to provide fire insurance in an amount
sufficient to protect the Lessee's improvements, equipment and fixtures on the
leased premises. Lessee further covenants to carry sufficient insurance to
save Lessor harmless from and to indemnify Lessor for any loss or damages
resulting from the Lessee's use of the leased premises or for any use in
connection therewith. The coverage shall be $2,000,000 for each occurrence.
Lessee shall be responsible for the condition of the leased premises, including
any entryway, during the term of this lease, and any damage or injury to
property or persons resulting from the condition of the premises or the
activities of the Lessee or its agents, employees, guests, business invitee, or
independent contractors thereon, and Lessee agrees to indemnify Lessor against
any loss therefrom. Certificates evidencing such insurance and bearing
endorsements requiring ten (10) days written notice to Lessor prior to any
change or cancellation shall be furnished to Lessor prior to Lessee's occupancy
of the property. There shall be no other insurance obligations required by
Lessor.
11. Waiver of Subrogation: Lessor and Lessee waive any and all claims for
recovery from the other party for any loss or damage to any of its property
insured under valid and collectible fire and extended coverage insurance
policies to the extent of any recovery collectible under such insurance. Each
party hereto agrees to notify its fire and extended coverage insurance
companies of the conditions of this agreement and have its insurance policies
properly endorsed, if necessary, so that insurance coverage will not be
invalidated by reason of the above waiver, and when necessary, to obtain a
certificate acknowledging waver of subrogation rights by respective insurance
carriers.
12. Damage or Destruction of Premises: If the leased premises are partly
damaged (less than 50%) not usable by Lessee), and if the damages are caused by
a risk which would be covered by insurance required to be obtained by Lessor,
repairs shall be at the expense of the Lessor, whether or not the damage
occurred as a result or fault on the part of the Lessee. If the damage
occurred from a peril which would not be covered by insurance required of
Lessor, repairs shall be at the expense of the Lessor unless the damage was the
result of fault by Lessee, his licenses, or invitees, in which case, Lessee
shall have the obligation and burden of repair. Rent shall be abated to the
extent the premises are untenable subsequent to damage and during the period of
repair except where damage occurs because of the fault of Lessee. If the
leased premises are destroyed or damaged by and act of God, by fire or other
casualty to the extent that premises become at least 50% not usable for
Lessee's purposes, either party may terminate this Lease upon written notice of
such decision to the other party with Fifteen (15) days following destruction
or damage. If neither party decided to terminate the Lease, Lessor shall
repair and reconstruct the premises with due diligence and this Lease shall
continue in full force and effect except the Lessee shall be entitled to a
reduction of rent from the date of the destruction or damage until the repair
or reconstruction is completed in an amount proportionate to whatever extent
damage or destruction and making of repairs interferes with Lessee's occupancy.
Rent shall not be abated from the date of damage when the damage occurred
because of fault by Lessee and Lessor elects to rebuild.
13. Liens: Except with respect to activities for which the Lessor is
responsible, the Lessee shall pay as due all claims for work done on or for
services rendered or material furnished to the leased premises and shall keep
the premises free from any liens.
14. Default: If the rent reserved by the Lease or any part thereof shall be
in default ten (10) days after payment is due, or if Lessee shall fail to
perform any other obligation created hereunder, or if Lessee shall be adjudged
a bankruptcy or insolvent by any court, or if a receiver or trustee in
bankruptcy or a receiver of the property of the Lessee shall be appointed in
any suit or proceeding brought by or against Lessee, or if Lessee shall make an
assignment for the benefit of creditors, or if an execution shall be issued
against Lessee, or if this Lease shall by operation of law pass to any person
other than Lessee, then, and in each and every such case, Lessor may, at any
subsequent time, after once notifying Lessee in writing of such default and if
such default shall continue for thirty (30) days after written notice thereof
by Lessor to Lessee (unless within ten (10) days after such notice Lessee
commences and diligently prosecutes the curing of any default other than
default in the payment of rent), declare the Lease terminated, re-enter the
premises, or any part thereof, with or without legal process, remove Lessee or
any other occupant, using such force as may be necessary, and fully repossess
said premises. Lessor shall also have the right to collect by summary
proceedings or otherwise any overdue rent, and the further right, at any time,
to collect and receive commencement of suit, or any final judgment of the
premises. If the property is abandoned by Lessee, termination shall be
automatic without notice. If the Lease is terminated for any reason, Lessee's
liability to Lessor for damages shall survive such termination. The rights and
the obligations of the parties in the event of termination shall be as follows:
a. Lessee shall vacate the property immediately, remove any property of
Lessee including any fixtures which Lessee is required to remove at the end of
the Lease term, provided however, Lessee hereby expressly grants to Lessor a
lien on any of the Lessee's property located on the premises, including
Fixtures, for any overdue rent, or other damages, for which the Lessee is
liable as of the date of termination of the Lease. Lessee also agrees to
perform a cleanup, alteration or any other work required to leave the property
in the required condition at the end of the term and the deliver all keys to
the Lessor. Lessee shall remove all of Lessee's fixtures requested by Lessor,
but in no event shall Lessee's fixtures be removed without Lessor's written
consent. All interior walls and partitions constructed by Lessee shall become
the property of Lessor and shall not be removed.
b. In the event of termination, Lessor shall be entitled to recover
immediately without waiting to the due date for any future rent or until the
date fixed for expiration of the Lease term, the following amounts as damages:
1. Any excess of (a) the value of all of Lessee's obligations under
this Lease, including the obligation to pay rent, from the date of default
until the end of the term, over (b) the reasonable rental value of the property
for the same period figured as the date of default, the net result to be
discounted to the date of default at a reasonable rate not exceeding 4% per
annum.
2. The reasonable costs of reentry and reletting including without
limitation the costs of any cleanup, refurbishing, removal of Lessee's property
and fixtures, or any other expenses occasioned by Lessee's failure to quit the
premises upon termination and to leave them in the required condition, any
remodeling costs, attorney's fees, court costs, broker commissions and
advertising costs.
3. The loss of reasonable rental value from the date of default
until a new tenant has been secured.
4. The foregoing remedies shall be in addition to and shall not
exclude any other remedy available to Lessor under applicable law.
15. Condition of Premises: At the expiration of the Lease term, Lessee shall
surrender the leased property in as good condition as it was at the beginning
of the term, reasonable use and wear and damage by the elements excepted.
16. Waiver: Waiver by Lessor of strict performance of any provision of this
Lease shall not be a waiver of or prejudice to the Lessor's right to require
strict performance of the same provision in the future or of any other
provision.
17. Attorney's Fees: If suit or action is instituted in connection with any
controversy arising out of this Lease, the prevailing party shall be entitled
to recover in addition to costs such sum as the court may adjudge reasonable as
attorney's fees, including attorney's fees for any appeals herein.
18. Representations: The Lessee acknowledges that this Lease is accepted and
executed on the basis of the Lessee's own examination and personal knowledge of
the value and condition of the premises; that no representation as to the
value, condition or repair of said premises has been made by Lessor or Lessor's
agents.
19. Notice: Any notice required or permitted under this Lease shall be given
when actually delivered or when deposited in the United States mail as
Certified Mail addressed as follows:
To Lessor: Bill Proulx
3430 Chevy Chase
Eugene, Oregon 97401
To Lessee: Credit Concepts L.L.C.
2149 Centennial Plaza
Eugene, Oregon 97401
or to such other address as may be specified from time to time by either of the
parties in writing.
20. Holding Over: Any holding over after the expiration of the term of this
Lease, with consent of Lessor, shall be construed to be a tenancy from month to
month upon the terms, covenants and conditions in effect prior to such holding
over and terminable by either party giving to the other party thirty (30) days
notice of the termination of the tenancy.
21. Improvements: Lessor to replace existing carpet, construct a wall and
rear exit door and install a new relight as diagrammed in option "B" (see
attached). Lessee to install signage and mail slot.
22. Options to Renew: Lessee shall have the option of renewing this Lease for
an additional five (5) year period on the same terms and conditions except as
to rent, providing that the lease is not in default at the time the option is
exercised. Future rent shall be set at the discretion of the Lessor. In the
event Lessee desires to renew this Lease, Lessee must give Lessor notice of
intent to renew not more than one year nor less than six months prior to the
expiration of the original term of this Lease. (see Exhibit A, Addendum to
Options)
23. Deposit: A check in the amount of $2,489.00 is due with the signing of
this lease of which $1,244.50 is used as the second months rent and the
remaining $1,244.50 is to be used as a security deposit.
In Witness Whereof, the parties hereto have executed this instrument this
14th day of October, 1997.
Lessor: /s/ Bill Proulx for Keypac Leasing
----------------------
Lessee: /s/ Thomas W. Palmer for Credit Concepts L.L.C.
----------------------
<PAGE>
EXHIBIT "A"
Addendum to "Options to Renew"
Lessor to notify lessee of proposed rent schedule for the five year renewal
period within 10 days of the lessee's written notification of intent to renew
the lease. Lessee shall have the sole right to accept or reject the lessor's
proposed rent schedule. In the event the lessee rejects the proposed rent
schooled, the notification to renew the lease shall be considered null and
void.
Lessor: /s/ Bill Proulx for Keypac Leasing
------------------------------
Lessee: /s/ Thomas W. Palmer for Credit Concepts L.L.C.
------------------------------
<PAGE>
LIMITED GUARANTY
This Agreement made and entered into this 14th day of October 1997, by and
between Keypac Leasing, as Landlord by and between Keypac Leasing, as Landlord
by and between Eugene C. Albert & Thomas W. Palmer, hereinafter referred to as
"Guarantors" which agreement is set forth below as follows:
IN consideration for the Landlord's agreement to lease a certain portion of
real property described in the lease attached hereto and by reference
incorporated herein, to Credit Concepts L.L.C., the undersigned as Guarantors
hereby agree to enter into this Guarantee Agreement.
The undersigned Guarantors hereby jointly and severally agree to guarantee to
the Landlord, that Credit Concepts L.L.C. will pay to the Landlord all sums
required of Credit Concepts L.L.C. under the terms of the Lease Agreement. In
the event Credit Concepts L.L.C. fails to pay any sum due and owing to the
Landlord the Guarantors jointly and severally agree to pay all sums due within
thirty days notice thereof.
IN the event Credit Concepts L.L.C. fails to comply with any of the terms and
conditions of the lease agreement, then, the owner shall provide to the
Guarantors written notice of such breach and provide to the Guarantors 30 days
to remedy such breach prior to commencing any action on this Guaranty
Agreement. In the event the Guarantors fail to remedy such default within the
30 day notice, then, in such event, the Landlord shall be entitled to commence
an action on this guarantee agreement for all sums due and owing.
Landlord Guarantors
/s/ Bill Proulx /s/ Eugene C. Albert
- ------------------------- ----------------------------
Bill Proulx Eugene C. Albert
Keypac Leasing
/s/ Thomas W. Palmer
----------------------------
Thomas W. Palmer
<PAGE>
EXHIBIT 10(r)
NOTE
#___-98
$____________ EUGENE, OREGON
________________________, 199___ after date, I (or if more than one maker), we
jointly and severally, promise to pay to the order of ________________________
at ________________________; ________________________________________ DOLLARS,
With interest hereon at the rate of 12.000% per annum from March 26, 1998 until
paid; interest to be paid monthly and if so not paid, all the principal and
interest, at the option of the holder of this note, shall become immediately
due and collectable. Any part hereof may be paid at any time. If this note is
placed in the hands of an attorney for collection, I/we promise and agree to
pay holder's reasonable attorney's fees and collection costs, even though no
such suit or action is filed hereon; if a suit is filed, the amount of such
reasonable attorney's fees shall be fixed by the courts in which the suit or
action, including any appeal therein, is tried, heard or decided.
Other clauses: The funds shall be used only as capital for the operation of
Credit Concepts Inc.
Credit Concepts, Inc.
By:______________________________
Its President
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference under the captions "Selected Financial Data"
and "Experts" and to the use of our report dated August 19, 1998 on the
financial statements of Credit Concepts, Inc. in the Registration Statement on
Form SB-2 and related Prospectus of Credit Concepts, Inc. for the registration
of its Investment Certificates.
Yergen and Meyer LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF CREDIT CONCEPTS, INC. FOR THE PERIOD ENDED JULY 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 55,003
<SECURITIES> 0
<RECEIVABLES> 4,424,810
<ALLOWANCES> (191,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 37,705
<DEPRECIATION> (4,020)
<TOTAL-ASSETS> 4,483,631
<CURRENT-LIABILITIES> 37,454
<BONDS> 4,154,907
0
0
<COMMON> 150,000
<OTHER-SE> 141,270
<TOTAL-LIABILITY-AND-EQUITY> 4,483,631
<SALES> 0
<TOTAL-REVENUES> 471,256
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 151,028
<LOSS-PROVISION> 231,129
<INTEREST-EXPENSE> 154,671
<INCOME-PRETAX> (65,572)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,572)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
