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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 13)*
GIANT GROUP, LTD.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01
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(Title of Class of Securities)
374503100
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(CUSIP Number)
Burt Sugarman
150 El Camino Drive, Suite 303
Beverly Hills, California 90212
(310) 273-5678
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 7, 1996
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(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to a subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to liabilities of this section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of pages
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SCHEDULE 13D
CUSIP No. 374503100 Page 2 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BURT SUGARMAN
S.S. #.###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
BK & PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS (2d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
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7 SOLE VOTING POWER
NUMBER OF
2,988,672 shares (includes options to purchase
SHARES 1,599,202 shares).
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,988,672 shares (includes options to purchase
1,599,202 shares).
PERSON WITH ----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,988,672 shares (includes options to purchase 1,599,202 shares).
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.9%
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14 TYPE OF REPORTING PERSON*
IN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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Reference is hereby made to that certain Schedule 13D, dated January
13, 1982, as amended, filed by Burt Sugarman with respect to the common stock,
par value $0.01 per share (the "Common Stock"), of GIANT GROUP, LTD., a
Delaware corporation (the "Company"), collectively referred to herein as the
"Schedule." Unless otherwise indicated, capitalized terms used herein have the
meanings ascribed to them in the Schedule. Unless otherwise indicated herein,
the information contained in the Schedule remains unchanged. The Schedule is
hereby amended as follows:
Item 2. IDENTITY AND BACKGROUND. Item 2 of the Schedule is hereby
amended by adding the following:
Mr. Sugarman is the Chairman of the Board of Directors, President and
Chief Executive Officer of the Company. In July 1991, Mr. Sugarman, without
admitting or denying the allegations in a complaint filed by the Securities and
Exchange Commission (the "SEC"), consented to an Order of the United States
District Court, District of Columbia, permanently enjoining him from violating
Section 17(a)(2) of the Securities Act of 1933, as amended (the "Securities
Act") and paid $556,522, plus prejudgment interest of $63,333. The SEC
complaint had alleged that Mr. Sugarman violated Section 17(a)(2) of the
Securities Act in connection with purchases in October 1989 by the Company and
others of shares of common stock of Rally's Hamburgers, Inc. In 1991, the
Company indemnified Mr. Sugarman for amounts paid by him to the SEC and for his
expenses in connection with the SEC investigation.
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Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule is hereby amended by adding the following:
On February 7, 1996, Mr. Sugarman exercised options, previously granted
to him by the Company under its 1985 Non-Qualified Stock Option Plan, to
acquire 300,000 shares of the Company's Common Stock for an aggregate exercise
price of $2,025,000. Of that amount, $1,100,000 was borrowed from Bank of
America N.T.&S.A. under a $2,000,000 unsecured line of credit, dated November
1, 1993, which is due on November 1, 1996 and bears interest at Bank of
America's reference plus 0.25%. The source of the remainder of the exercise
price ($925,000) was personal family funds.
Item 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule is hereby amended by adding the following:
Mr. Sugarman decided to exercise a portion of the options for Company
Common Stock he holds because he believes in the Company's future. While Mr.
Sugarman has no present intention to purchase additional shares of Common
Stock, he may, from time to time, determine to exercise additional options.
Except to the extent indicated above, Mr. Sugarman presently has no
plans or proposals which relate to or would result in any of the events
described in Item 4 (a)-(j) of Schedule 13D.
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Item 5. INTEREST IN SECURITIES OF THE iSSUER.
Item 5 of the Schedule is hereby amended to read as follows:
As of February 7, 1996, Mr. Sugarman beneficially owns 2,988,672 shares
of Common Stock, including 1,389,470 shares which are directly owned and
1,599,202 shares which are the subject of exercisable options, constituting
approximately 46.9% of the outstanding shares (computed on the basis of
4,778,385 shares outstanding as of February 7, 1996, after giving effect to the
exercise of options to purchase 300,000 shares of Common Stock, and the
1,599,202 shares subject to exercisable options). Mr. Sugarman has sole voting
and dispositive power with respect to such shares. Such amount does not
include 20,500 shares of the Common Stock, owned by Mr. Sugarman's wife or
2,000 shares held as custodian for his minor child, as to which Mr. Sugarman
disclaims beneficial ownership. The only transaction in the Common Stock
effected by Mr. Sugarman in the last 60 days was the option exercise described
in Item 3, which is incorporated herein by this reference.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 3. Is hereby incorporated by reference.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Credit Agreement, dated November 1, 1993, as amended.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 12, 1996
/s/ Burt Sugarman
--------------------------------------
BURT SUGARMAN
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EXHIBIT 1
AMENDMENT NO. 1 TO INDIVIDUAL LOAN AGREEMENT
This amendment No. 1 (the "Amendment") dated as of November 1, 1994, is
between Bank of America National Trust and Savings Association (the "Bank") and
Burt Sugarman (the "Borrower").
RECITALS
--------
A. The Bank and the Borrower entered into a certain Individual Loan
Agreement dated as November 1, 1993 (the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
---------
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 In paragraph 1.2 of the Agreement, the date "November 1, 1996" is
substituted for the date "November 1, 1994".
2.2 Paragraph 6.2(a) of the Agreement is hereby revised to read in its
entirety as follows:
(a) Borrower's annual financial statements, by August 1 of each
year. These financial statements may be Borrower prepared.
2.3 Paragraph 6.2(b) of the Agreement is hereby revised to read in its
entirety as follows:
(b) Copies of the Borrower's federal income tax return (with all
forms K-1, attached) by August 1, of each year, together with
a statement of any contributions made by the Borrower to any
subchapter S corporations or trust, and, if requested by the
Bank, copies of any extensions of the filing date.
3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
BANK OF AMERICA
National Trust and Savings Association
X X
--------------------------------- ---------------------------------
By:
Title:
AmendL (10/92) - 1 -
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[LOGO] BANK OF AMERICA Individual Loan Agreement
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This Agreement dated as of November 1, 1993, is between Bank of America
National Trust and Savings Association (the "Bank") and Burt Sugarman (the
"Borrower").
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 LINE OF CREDIT AMOUNT
(a) During the availability period described below, the Bank will provide a
line of credit to the Borrower. The amount of the line of credit (the
"Commitment") is Two Million Dollars ($2,000,000).
(b) This is a revolving line of credit. During the availability period,
the Borrower may repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal balance of
the line of credit to exceed the Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date
of this Agreement and November 1, 1994 (the "Expiration Date") unless the
Borrower is in default.
1.3 INTEREST RATE.
(a) The interest rate is the Bank's Reference Rate plus 0.25 percentage
point.
(b) The Reference Rate is the rate of interest publicly announced from time
to time by the Bank in San Francisco, California as its Reference Rate.
The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans. The Bank may price loans to its customers at,
above, or below the Reference Rate. Any change in the Reference Rate
shall take effect at the opening of business on the day specified in
the public announcement of a change in the Bank's Reference Rate.
1.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on November 1, 1993, and then monthly
thereafter until payment in full of any principal outstanding under
this line of credit.
(b) The Borrower will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than the
Expiration Date.
2. EXPENSES
2.1 EXPENSES. The Borrower agrees to reimburse the Bank for any expenses
it incurs in the preparation of this Agreement and any agreement or
instrument required by this Agreement. Expenses include, but are not
limited to, reasonable attorneys' fees, including any allocated costs
of the Bank's in-house counsel.
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3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 REQUESTS FOR CREDIT. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
3.2 DISBURSEMENT AND PAYMENTS. Each disbursement by the Bank and each
payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;
(b) made for the account of the Bank's branch selected by the Bank from
time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may, at
its discretion, require the Borrower to sign one or more promissory
notes.
3.3 TELEPHONE AUTHORIZATION.
(a) The Bank may honor telephone instructions for advances or repayments
given by any one of the individual signer(s) of this Agreement or a
person or persons authorized in writing by any one of the signer(s) of
this Agreement.
(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's account number 05034-05159, or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower.
(c) The Borrower will provide written confirmation to the Bank of any
telephone instructions within 3 days. If there is a discrepancy and
the Bank has already acted on the telephone instructions, the telephone
instructions will prevail over the written confirmation.
(d) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it
reasonably believes are made by an individual authorized by the
Borrower to give such instructions. This indemnity and excuse will
survive this Agreement's termination.
3.4 DIRECT DEBIT
(a) The Borrower agrees that interest and any fees will be deducted
automatically on the due date from checking account number .
(b) The Bank will debit the account on the dates the payments become due.
If a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.
(c) The Borrower will maintain sufficient funds in the account on the dates
the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.
3.5 BANKING DAYS. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. All payments and disbursements which would be due on a
day which is not a banking day will be due on the next banking day. All
payments received on a day which is not a banking day will be applied to the
credit on the next banking day.
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3.6 TAXES. The Borrower will not deduct any taxes from any payments it
makes to the Bank. If any government authority imposes any taxes on any
payments made by the Borrower, the Borrower will pay the taxes and will also
pay to the Bank, at the time interest is paid, any additional amount which the
Bank specifies as necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed. Upon request by the Bank, the
Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within 30 days after the due date. However,
the Borrower will not pay the Bank's net income taxes.
3.7 ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any request
or requirement of a regulatory agency which is applicable to all national
banks or a class of all national banks. The costs and losses will be
allocated to the loan in a manner determined by the Bank, using any reasonable
method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and commitments
for credit.
3.8 INTEREST CALCULATION. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a
higher fee than if a 365-day year is used.
3.9 INTEREST ON LATE PAYMENTS. At the Bank's sole option in each instance,
any amount not paid when due under this Agreement (including interest) shall
bear interest from the due date at the Bank's Reference Rate plus 2.00
percentage points. This may result in compounding of interest.
3.10 DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, advances under this Agreement will at the option
of the Bank bear interest at a rate per annum which is 2.00 percentage points
higher than the rate of interest otherwise provided under this Agreement. This
will not constitute a waiver of any event of default.
4. CONDITIONS
Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require as conditions precedent to this Agreement.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation.
5.1 ENFORCEABLE AGREEMENT. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed
and delivered, will be similarly legal, valid, binding and enforceable.
5.2 NO CONFLICTS. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower is bound.
5.3 FINANCIAL INFORMATION. All financial and other information that has
been or will be supplied to the Bank, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any guarantor's) financial condition.
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(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
5.4 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, its property or any of its business, which, if
lost, would impair the Borrower's financial condition or that of the Borrower's
business or would impair the Borrower's ability to repay the loan, except as
have been disclosed in writing to the Bank.
5.5 PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade
name rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
5.6 OTHER OBLIGATIONS. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed
in writing to the Bank.
5.7 INCOME TAX RETURNS. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year, except as have been
disclosed in writing to the Bank.
5.8 NO EVENT OF DEFAULT. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
6. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
6.1 USE OF PROCEEDS. To use the proceeds of the credit only for personal
investment/construction financing for a ranch home in Montana.
6.2 FINANCIAL INFORMATION. To provide the following financial information
and statements and such additional information as requested by the Bank from
time to time:
(a) Within 90 days of the Expiration Date, the Borrower's annual financial
statements. These financial statements may be Borrower prepared.
(b) Copies of the Borrower's federal income tax return (with all forms K-1
attached), 90 days prior to Expiration Date, together with a statement
of any contributions made by the Borrower to any subchapter S
corporation or trust, and, if requested by the Bank, copies of any
extensions of the filing date.
6.3 NET WORTH.
6.4 TRUSTS. Not to transfer any of the Borrower's assets to a trust unless
the trust is acceptable to the Bank in form and content, and the trustee
guaranties payment of the Borrower's obligations under this Agreement prior to
any such transfer.
6.5 OTHER DEBTS. Not to have outstanding or inccur any direct or
contingent debts (other than those to the Bank), or become liable for the debts
of others, without the Bank's written consent. This does not prohibit:
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(a) Endorsing negotiable instruments received in the usual course of
business.
(b) Debits and lines of credit in existence on the date of this Agreement
disclosed to the Bank.
6.6 OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed to the Bank.
6.7 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over One Hundred Thousand Dollars ($100,000) against the
Borrower (or any guarantor) or any of the Borrower's property or
business.
(b) any substantial dispute between the Borrower (or any guarantor) and any
government authority, or which may affect the Borrower's property or
business.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's (or any guarantor's)
financial condition or operations.
(e) any change in the Borrower's name or address.
6.8 COMPLIANCE WITH LAWS. To comply with the laws, regulations, and orders
of any government body with authority over the Borrower's business.
6.9 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.
6.10 COOPERATION. To take any action requested by the Bank to carry out the
intent of this Agreement.
6.11 ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written
consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) acquire or purchase a busines or its assets.
(c) sell or otherwise dispose of any assets for less than fair market value
or enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
6.12 NO CONSUMER PURPOSE. Not to use this loan for personal, family, or
household purposes.
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7. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply
whether the hazardous substance is on, under or about the Borrower's property
or operations or property leased to the Borrower. The indemnity includes but
is not limited to attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. For these purposes, the term
"hazardous substances" means any substance which is or becomes designated as
"hazardous" or "toxic" under any federal, state or local law. This indemnity
will survive repayment of the Borrower's obligations to the Bank.
8. DEFAULT
If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically become due
immediately.
8.1 FAILURE TO PAY. The Borrower fails to make a payment under this
Agreement when due.
8.3 FALSE INFORMATION. The Borrower has given the Bank false or misleading
information or representations.
8.4 DEATH. The Borrower dies.
8.5 BANKRUPTCY. The Borrower (or any guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower (or any
guarantor), or the Borrower (or any guarantor) makes a general assignment for
the benefit of creditors.
8.6 RECEIVERS; TERMINATION. A receiver or similar official is appointed
for the Borrower's (or any guarantor's) business, or the business is
terminated.
8.7 LAWSUITS. Any lawsuit or lawsuits are filed against the Borrower (or
any guarantor) in an aggregate amount of One Hundred Thousand Dollars
($100,000) or more.
8.8 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor); or the Borrower (or any guarantor) enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of One Hundred Thousand Dollars ($100,000) or more in excess
of any insurance coverage.
8.9 GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's)
financial condition or ability to repay.
8.10 MATERIAL ADVERSE CHANGE. A material adverse change occurs in the
Borrower's (or any guarantor's) financial condition, properties or prospects,
or ability to repay the loan.
8.11 CROSS-DEFAULT. Any default occurs under any agreement in connection
with any credit the Borrower (or any guarantor) has obtained from anyone else
or which the Borrower (or any guarantor) has guaranteed.
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<PAGE> 8
8.12 OTHER BANK AGREEMENTS. The Borrower (or any guarantor) fails to meet
the conditions of, or fails to perform any obligation under any other agreement
the Borrower (or any guarantor) has with the Bank or any affiliate of the Bank.
8.13 USE OF PROCEEDS. The Borrower does not utilize or invest the proceeds
of any extension of credit made under this Agreement for the purposes described
by the Borrower to the Bank.
8.14 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article.
8.15 REVOCATION OR TERMINATION. The Borrower is revoked or otherwise
terminated or all or a substantial part of the Borrower's assets are
distributed or otherwise disposed of.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 FINANCIAL COMPUTATIONS. Except as otherwise stated in this Agreement,
all financial information provided to the Bank and all financial covenants will
be made in accordance with accounting principles applied consistently with
those applied in the preparation of the Borrower's financial statements dated
May 25, 1993, and shall specifically exclude any upward revaluation of assets
(other than marketable securities) after that date.
9.2 CALIFORNIA LAW. This Agreement is governed by California law.
9.3 SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrower.
9.4 ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury
to persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
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(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent
of the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether
any such claim or controversy is barred by the statute of limitations
and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at this time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, both the Borrower and the Bank
must consent to submission of the claim or controversy to arbitration.
If both parties do not consent to arbitration, the controversy or claim
will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or a panel
of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are
selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or
the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:
(A) in interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if
the other party contests the lawsuit. However, if the controversy or
claim arises from or relates to an obligation to the Bank which is
secured by real property located in California at the time of the
proposed submission to arbitration, this right is limited according to
the provision above requiring the consent of both the Borrower and the
Bank to seek resolution through arbitration.
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<PAGE> 10
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
9.5 SEVERABILITY; WAIVERS. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default,
it may enforce a later default. Any consent or waiver under this Agreement
must be in writing.
9.6 ADMINISTRATION COSTS. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
9.7 ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with
the enforcement or preservation of any rights or remedies under this Agreement
and any other documents executed in connection with this Agreement, and
including any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. As used in this paragraph, "attorneys' fees" includes the
allocated costs of the Bank's in-house counsel.
9.8 ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
9.9 NOTICES. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and
the Borrower may specify from time to time in writing.
9.10 HEADINGS. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
9.11 COUNTERPARTS. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
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This Agreement is executed as of the date stated at the top of the first page.
[BofA LOGO]
Bank of America
National Trust and Savings Association
X - X -
---------------------------------- ------------------------------------
By:
Title:
Address where notices to the Bank Address where notices to the Borrower
are to be sent: are to be sent:
5800 S. Eastern Avenue 150 El Camino Drive
City of Commerce, CA 90040 Beverly Hills, CA 90212
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