Employee Stock Option Plan Business Loan Agreement & Related
Documents - Bank of America Oregon
BANK OF AMERICA OREGON BUSINESS LOAN AGREEMENT
This Agreement dated as of March 27, 1995, is between Bank of America Oregon
(the "Bank") and United Bancorp (the "Borrower").
1. TERM LOAN AMOUNT AND TERMS
1.1 Loan Amount. The Bank agrees to provide a term loan to the Borrower in the
amount of Two Hundred Twenty Seven Thousand Eight Hundred Ninety Two and
13/100 Dollars ($227,892.13) (the "Commitment").
1.2 Availability Period. The loan is available in one disbursement from the
Bank between the date of this Agreement and June 15, 1995 unless the
Borrower is in default.
1.3 Interest Rate.
(a) The interest rate is ninety percent (90%) of the Reference Rate.
(b) The Reference Rate is the rate of interest publicly announced from time to
time by Bank of America National Trust and Savings Association ("BofA
California") in San Francisco, California, as its Reference Rate. The
Reference Rate is set based on various factors, including BofA
California'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 days specified in the public announcement of
a change in the Reference Rate.
1.4 Repayment Terms.
(a) The Borrower will pay all accrued but unpaid interest on June 15, 1995,
and then quarterly thereafter and upon payment in full of the principal
of this loan.
(b) The Borrower will repay principal in 20 successive equal quarterly
installments of Eleven Thousand Three Hundred Ninety-Four and 61/100
Dollars ($11,394.61) starting June 15, 1995. On March 15, 2000, the
Borrower will repay the remaining principal balance plus any interest
(c) The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote installment of principal
due under this Agreement.
2. FEES AND EXPENSES
2.1 Loan Fee. The Borrower agrees to pay a Five Hundred Dollar ($500) fee due
upon the execution of this Agreement.
2.2 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.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 Disbursements 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
(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.
3.2 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 Oregon and banks are 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
3.3 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. 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
3.4 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.
3.5 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 ninety percent (90%) of the Reference
Rate. This may result in compounding of interest.
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower
under this Agreement:
4.1 Authorizations. Evidence that the execution, delivery and performance by
the Borrower of this Agreement and any instrument or agreement required
under this Agreement have been duly authorized.
4.2 ESOP Loan Documentation.
(a) An executed copy of the Promissory Note dated as of March 27, 1995 between
the Borrower and the Trustees ("Trustees") of the United Bancorp Employee
Stock Ownership Plan and the Trust (the "Trust") (collectively, the
"ESOP") executed by the Trustees evidencing the loan by the Borrower to
the Trustees ("ESOP Loan") and the Pledge Agreement executed in connection
therewith (collectively, the "ESOP Loan Documents"); and
(b) a copy of the determination letter issued by the Internal Revenue Service
relating to the United Bancorp Employee Stock Ownership Plan.
4.3 Other Items. Any other items that the Bank reasonably requires.
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
5.1 Organization of Borrower. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.
5.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.
5.3 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
5.4 Good Standing. In each state in which the Borrower does business, it is
properly licensed, in existence and in good standing, and, where required,
in compliance with fictitious name statutes.
5.5 No Conflicts. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
5.6 Financial Information. All financial and other information that has been
or will be supplied to the Bank, including the Borrower's financial
statement dated as of December 31, 1994, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's financial condition.
(b) in form and content required by the Bank.
(c) in compliance with all government regulations that apply.
Since the date of the financial statement specified above, there has been no
material adverse change in the assets or the financial condition of the
5.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the
Borrower's financial condition or ability to repay the loan, except as
have been disclosed in writing to the Bank.
5.8 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.
5.9 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.
5.10 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.
5.11 ERISA Plans.
(a) The Borrower has fulfilled its obligations, if any, under the minimum
funding standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and has not incurred any liability with
respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under Section 4043(b) of ERISA for which
the PBGC requires 30 day notice.
(c) No action by the Borrower to terminate or withdraw from any Plan has been
taken and no notice of intent to terminate a Plan has been filed under
Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan under Section 4042
of ERISA, and no event has occurred or condition exists which might
constitute grounds for the commencement of such a proceeding.
(e) The following terms have the meanings indicated for purposes of this
(i) "Code" means the Internal Revenue Code of 1986, as amended from time to
(ii) "ERISA" means the Employee Retirement Income Act of 1974, as amended
from time to time.
(iii)"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
(iv) "Plan" means any employee pension benefit plan maintained or
contributed to by the Borrower and insured by the Pension Benefit
Guaranty Corporation under Title IV of ERISA.
5.12 ESOP. The Trust established is a validly organized and existing trust
established by the Borrower, is exempt from Federal income taxes under
Section 501(a) of the Code and satisfies the requirements of Section 403
of ERISA; the ESOP satisfies Sections 401(a) and 4975(e)(7) of the Code
and is in compliance with all other applicable provisions of ERISA and
5.13 ESOP Stock The ESOP stock qualifies as "employer securities" within the
meaning of Section 409(1) of the Code.
5.14 Dividends. To the extent dividends paid on the ESOP stock are used by the
ESOP to make payments on the ESOP Loan, such dividends will be fully
deductible by the Borrower under Section 404(k) of the Tax Code.
5.15 Purchase Price of the ESOP Stock. The purchase price for each share of the
ESOP stock has been arrived at in compliance with all applicable
provisions of the ESOP and in compliance with applicable law, including
but not limited to the provisions of Section 401(a)(28)(C) of the Code.
5.16 Loan is Exempt The loan evidenced by the ESOP Loan qualifies for the
exemption set forth in Section 408(b)(3) of ERISA and the regulations
thereunder and in Section 4975(d)(3) of the Code and the regulations
thereunder, and does not constitute a "prohibited transaction" as defined
in Section 406(a) and Section 406(b)(1) and Section 4975(c)(1)(A), (B),
(C), (D) and (E) of the Code and the regulations thereunder.
5.17 ESOP Stock Purchase is Exempt. The purchase of the ESOP stock by the ESOP
from the Borrower pursuant to the ESOP Loan Documents qualifies for the
exemption contained in Section 408(e) of ERISA and Section 4975(d)(13) of
the Code, and does not constitute a "prohibited transaction" as defined in
Section 406(a) and Section 406(b)(1) and Section 4975(c)(1)(A), (B), (C),
(D) and (E) of the Code.
5.18 Authorization. The execution, delivery and performance by the ESOP of its
obligations under the ESOP Loan Documents have been duly authorized by all
necessary action of the Trustee on behalf of the ESOP, require no action
under any federal, state or local law, by or in respect of, or filing
with, any governmental authority or official and do not conflict with, or
result in a breach or other violation of any applicable provision of such
laws or any regulation, order, writ, injunction or decree of any court or
governmental authority thereunder, or any of the terms, conditions or
provisions of any material agreement of instrument, to which the ESOP is
a party or by which the ESOP is bound.
5.19 Actions Against ESOP. There is no pending or threatened action, suit or
proceeding, or any order, writ, judgment, award, injunction or decree,
against or effecting the ESOP before any court, governmental authority or
arbitrator which materially adversely affects the financial condition or
operations of the ESOP or materially adversely effects the ability of the
ESOP to perform its obligations under the ESOP Loan Agreement. The ESOP
is not in violation of or default with respect to (a) any order, writ,
injunction or decree of any court or (b), any applicable provision of any
federal, state or local law, or any order, regulation or demand of any
governmental authority or instrumentality thereunder, which violation or
default materially adversely affects the ability of the ESOP to perform
its obligations under the ESOP Loan Agreement.
5.20 Enforceability. The ESOP Loan Documents have been duly executed and
delivered by the Trustee on behalf of the ESOP and constitute the valid
and binding obligations of the ESOP, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
except as the enforceability thereof may be limited by equitable
5.21 No Default. The repayment of the ESOP Loan by the ESOP, the acquisition of
the ESOP stock by the ESOP and the ESOP's incurrance of the indebtedness
evidenced by the ESOP Loan Documents do not result in any default under or
violate the conditions of any agreement to which the ESOP is a party or by
which it is bound.
5.22 Consents, Approvals, Etc. The execution, delivery and performance of the
Stock Purchase Agreement and the purchase of the ESOP stock pursuant to
the ESOP Loan Documents (a) will not require any registration with,
consent or approval of, or notice to, or other action by or in respect of
or filing with, any governmental authority or official by the ESOP under
any federal, state or local law (except those routine filings required
after the close of the plan year of the ESOP under the reporting
requirements of the Code and ERISA), and do not contravene or constitute
(with or without the giving of notice or lapse of time or both) a default
under or violation by the ESOP of, (i) any provisions of any applicable
law or regulation of the United States of America, (ii) any agreement or
other instrument binding upon the ESOP or (iii) any judgment, injunction,
order or decree binding upon the ESOP or (b) will not result in the
creation of imposition of any lien on any asset of the ESOP, except the
lien of the Borrower pursuant to the provisions of the ESOP Loan
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 funding the
purchase price of 12,534 shares of United Bancorp common stock by the
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 120 days of the Borrower's fiscal year end, the Borrower's annual
financial statements. These financial statements must be audited by a
Certified Public Accountant ("CPA") acceptable to the Bank. The statements
shall be prepared on a consolidating basis.
(b) Copies of the Borrower's Form 10-K Annual Report and Form 10-Q Quarterly
Report within 90 days after the date of filing with the Securities and
(c) Within 60 days of the period's end, the Federal Financial Institutions
Examination Council quarterly call reports for Douglas National Bank.
(d) Within 120 days of the Borrower's fiscal year end, a compliance
certificate of the Borrower signed by an authorized officer of the
Borrower setting forth whether there existed and whether there exists as
of the date of the certificate, any default under this Agreement and, if
any such default exists, specifying the nature thereof and the action the
Borrower is taking and proposes to take with respect thereto.
6.3 Capital Percentage. To maintain total equity equal to at least 5.0% of
total assets for each quarterly accounting period.
6.4 Tangible Net Worth. To maintain on a consolidated basis tangible net worth
equal to at least Seven Million Three Hundred Thousand Dollars
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization
expense, treasury stock, unamortized debt discount and expense, deferred
research and development costs, deferred marketing expenses and other like
intangibles) less total liabilities, including but not limited to accrued
and deferred income taxes, and any reserves against assets.
6.5 Double Leverage Ratio. To maintain a ratio of the Borrower's investment in
Douglas National Bank to the tangible net worth of United Bancorp not
exceeding 1.1:1.0 for each semi-annual accounting period.
6.6 Other Debts. Not to have outstanding or incur any direct or contingent
debts (other than those to the Bank and its affiliates), or become liable
for the debts of others without the Bank's written consent. This does not
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of business.
(c) Obtaining surety bonds in the usual course of business.
(d) Debts and lines of credit in existence on the date of this Agreement
disclosed in writing to the Bank.
(e) Additional debts for business purposes which do not exceed a total
principal amount of Five Hundred Thousand Dollars ($500,000) outstanding
at any one time.
6.7 Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns,
(a) Deeds of trust and security agreements in favor of the Bank and its
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing to
(d) Additional purchase money security interests in personal property acquired
after the date of this Agreement if the principal amount of debts secured
by such liens does not exceed Five Hundred Thousand Dollars ($500,000) at
any one time.
6.8 Loans to Officers. Not to make any loans, advances or other extensions of
credit to any of the Borrower's executives, officers, or directors or
shareholders (or any relatives of any of the foregoing).
6.9 Change of Ownership. Not to cause, permit, or suffer any change, direct or
indirect, in the Borrower's capital ownership of Douglas National Bank.
6.10 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit over Five Hundred Thousand Dollars ($500,000) against the
(b) any substantial dispute between the Borrower and any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's financial condition or
(e) any change in the Borrower's name, address or legal structure.
6.11 Books and Records. To maintain adequate books and records.
6.12 Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are
in the possession of a third party, the Borrower authorizes that third
party to permit the Bank or its agents to have access to perform
inspections or audits and to respond to the Bank's requests for
information concerning such properties, books and records.
6.13 Compliance with Laws. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with
authority over the Borrower's business.
6.14 Preservation of Rights. To maintain and preserve all rights, privileges,
and franchises the Borrower now has.
6.15 Maintenance of Properties. To make any repairs, renewals, or replacements
to keep the Borrower's properties in good working condition.
6.16 Cooperation. To take any action requested by the Bank to carry out the
intent of this Agreement.
6.17 Insurance. To maintain insurance as is usual for the business it is in.
6.18 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) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture, syndicate, or
(d) lease, or dispose of all or a substantial part of the Borrower's business
or the Borrower's assets.
(e) acquire or purchase a business or its assets.
(f) 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.
6.19 ERISA Plans. To give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(b) of ERISA for
which the PBGC requires 30 day notice.
(b) Any action by the Borrower to terminate or withdraw from a Plan or the
filing of any notice of intent to terminate under Section 4041 of ERISA.
(c) Any notice of noncompliance made with respect to a Plan under Section
4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a Plan under Section
4042 of ERISA.
6.20 Preserve ESOP. The Borrower shall take all actions within its corporate
authority and contractual rights to preserve and keep the ESOP in
existence and in full force and effect and comply in all material
respects with the terms of the ESOP.
6.21 ESOP's Books and Records. The Borrower shall permit any authorized
representative of the Bank to examine at reasonable times the books,
records and other documents relating to the properties and the affairs of
the ESOP in possession of the Borrower and which the Borrower has
authority to disclose and to make memoranda and extracts from such books,
records and other documents, and discuss with any such representative the
affairs, finances and accounts of the ESOP.
6.22 Repayment of ESOP Loan. The Borrower will use its best efforts to cause
all contributions and dividends made to the ESOP to be first applied to
pay reasonable operating expenses of the ESOP and to payment of interest
on and repayment of principal of the loan outstanding from the Borrower
to the ESOP evidenced by the ESOP Loan.
6.23 ESOP Documentation. Whenever required by applicable law, the Borrower will
amend the ESOP documents and seek new determination letters with respect
to the amended ESOP documents. Copies of all material amendments to the
ESOP documents and of any additional determination letters will be
delivered to the Bank.
6.24 ERISA. The Borrower will not:
(a) At any time, maintain, or be or become obligated to contribute on behalf
of its employees to, any pension plan, profit sharing plan, other defined
contribution plan, or any other such qualified plan, other than those
pension plans and profit sharing plans disclosed to the Bank as of the
execution of this Agreement.
(b) At any time, permit any pension plan to:
(i) engage in any non-exempt "prohibited transaction," as such term is
defined in Section 4975 of the Code, if engaged in such prohibited
transaction could reasonably be expected to adversely affect the ESOP's
or the Borrower's ability to perform their respective obligations with
respect to the ESOP Loan or its obligations to the Bank,
(ii) incur any "accumulated funding deficiency," as that term is defined in
Section 302 of ERISA, or
(iii) terminate in a manner which could result in any material liability of
the Borrower to the pension plan or to the PBGC.
(c) At any time, assume any obligations to contribute to any Multiemployer
(d) At any time, permit any pension plan to fail to comply with ERISA or other
applicable law in any material respect.
6.25 Prohibited Transactions. To the extent necessary to preserve the character
of the Term Loan as a "securities acquisition loan" within the meaning of
Section 133 (b)(1)(A) of the Code, the Borrower shall not enter into any
"prohibited transaction" as such term is defined in Section 4975(c) of
Code and the regulations promulgated thereunder which is not exempted by
Section 4975(d) of the Code and the regulations promulgated thereunder
relating to the ESOP.
6.26 Changes Relating to ESOP Stock. The Borrower shall not call, nor permit
the conversion of the ESOP stock, nor change the conversion or call rights
with respect to the ESOP stock or otherwise change the rights, privileges
and preferences associated with the ESOP stock without the prior written
consent of the Bank which consent shall not be unreasonably withheld if
such proposed change is accompanied by the written opinion of the
Borrowers ESOP counsel, acceptable to the Bank to the effect that such
change will not jeopardize the interest exclusion available to the Bank
under Section 133 of the Code.
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 a bankruptcy petition
is filed with respect to the Borrower, the entire debt outstanding under
this Agreement will automatically become due immediately.
7.1 Failure to Pay. The Borrower fails to make a payment under this Agreement
7.2 Non-compliance. The Borrower fails to meet the conditions of, or fails to
perform any obligation under:
(a) this Agreement,
(b) any other agreement made in connection with this loan, or
(c) any other agreement the Borrower has with the Bank or any affiliate of the
7.3 False Information. The Borrower has given the Bank false or misleading
information or representations.
7.4 Bankruptcy. The Borrower files a bankruptcy petition, a bankruptcy
petition is filed against the Borrower, or the Borrower makes a general
assignment for the benefit of creditors.
7.5 Receivers. A receiver or similar official is appointed for the Borrower's
business, or the business is terminated.
7.6 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more trade
creditors against the Borrower in an aggregate amount of Five Hundred
Thousand Dollars ($500,000) or more in excess of any insurance coverage.
7.7 Judgments. Any judgments or arbitration awards are entered against the
Borrower; or the Borrower enters into any settlement agreements with
respect to any litigation or arbitration, in an aggregate amount of Two
Hundred Fifty Thousand Dollars ($250,000) or more in excess of any
7.8 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's financial condition
or ability to repay.
7.9 Default under Guaranty or Subordination Agreement. Any guaranty,
subordination agreement, security agreement, deed of trust, or other
document required by this Agreement is violated or no longer in effect.
7.10 Material Adverse Change. A material adverse change occurs in the
Borrower's financial condition, properties or prospects, or ability to
repay the loan.
7.11 ERISA Plans. The occurrence of any one or more of the following events
with respect to the Borrower, provided such event or events could
reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect
on the financial condition of the Borrower with respect to a Plan:
(a) A reportable event shall occur with respect to a Plan which is, in the
reasonable judgment of the Bank likely to result in the termination of
such Plan for purposes of Title IV of ERISA.
(b) Any Plan termination (or commencement of proceedings to terminate a Plan)
or the Borrower's full or partial withdrawal from a Plan.
8. ENFORCING THIS AGREEMENT; MISCELLANEOUS
8.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made
under generally accepted accounting principles, consistently applied.
8.2 Oregon Law. This Agreement is governed by Oregon law.
8.3 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.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those that
(i) This Agreement (including any renewals, extensions or modifications of
(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 Oregon law.
(c) Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.
(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) 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) a provisional or interim remedy; and/or
(B) additional or supplementary remedies.
(h) The pursuit of or a successful action for provisional, 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.
(i) 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.
8.5 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.
8.6 Costs. If the Bank incurs any expenses in connection with enforcing this
Agreement or administering this Agreement (including in connection with
extending, amending, renewing or modifying this Agreement), or if the Bank
takes collection action under this Agreement, it is entitled to costs and
reasonable attorneys fees, including any allocated costs of in-house
8.7 Attorneys' Fees. In the event of a lawsuit or arbitration proceeding, the
prevailing party is entitled to recover costs and reasonable attorneys'
fees (including any allocated costs of in-house counsel) incurred in
connection with the lawsuit or arbitration proceeding, as determined by
the court or arbitrator (and not by a jury). Such costs and attorneys'
fees shall include, without limitation, those incurred on any appeal, as
determined by the appellate court, and any anticipated costs and
attorneys' fees to pursue or collect any judgment.
8.8 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; and
(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.
8.9 Exchange of Information. The Borrower agrees that the Bank may exchange
financial information about the Borrower with BankAmerica Corporation
affiliates and other related entities.
8.10 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 part of this Agreement, or to such other addresses as the
Bank and the Borrower may specify from time to time in writing.
8.11 Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this
8.12 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counter-
parts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
8.13 Written Agreements. Under Oregon law, most agreements, promises and
commitments made by the Bank 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 that Bank to be enforceable.
This Agreement is executed as of the date stated at the top of the first page.
Bank of America Oregon United Bancorp
By: Wayne E. Olsen By: Gary Kjensrud
Title: Vice President Title: Executive Vice President
Address where notices to the Bank Address where notices to the Borrower
are to be sent: are to be sent:
Financial Institutions Department #2094 P.O. Box 1007
P. O. Box 3066 Roseburg, Oregon 97470-0235
Portland, Oregon 97206