Document:

Exhibit 10

Exhibit 10.7            Guaranty

 

 

GUARANTY

 

LENDER:                       Temporary Financial Services, Inc.

                                        200 North Mullan Road, Suite

213

                                        Spokane, Washington 99206

 

BORROWER:                Genesis Financial, Inc.

                                        200 North Mullan

Road, Suite 217

                                        Spokane,

Washington 99206

 

GUARANTOR:             Michael

A. Kirk, a single man

                                        6519 North

Sutherlin

                                        Spokane,

Washington 99208

 

                                        Douglas B. Durham and Colleen D. Durham, husband and

wife

                                        1926

East 38th

                                        Spokane,

Washington 99223

 

This Guaranty supports and

backs the Warehousing Line of Credit Promissory Note and the related Security

Agreement between BORROWER and LENDER, both dated as of February 20, 2002

(collectively the “Credit Facility”).

 

Executed at: Spokane,

Washington, this 20th day of February, 2002.

 

For a valuable consideration

the undersigned and each of them, hereinafter collectively called “Guarantor”,

jointly and severally and unconditionally guarantees and promises to pay

Temporary Financial Services, Inc., a Washington corporation, (herein called

‘LENDER’), its successors or assigns, on demand in lawful money of the United

States of America, any and all indebtedness of the above named “BORROWER”, to

LENDER, as follows:

 

1. 

Maximum liability. The liability of Guarantor hereunder shall not exceed at any one time

the sum of: (a) The principal amount of the Credit Facility; (b) An amount

equal to interest, and fees owed by BORROWER on the Credit Facility; and, (c)

All costs, expenses and attorneys’ fees, including any on appeals, incurred by

LENDER in connection with the collection of the indebtedness of BORROWER or

with the collection or sale of any collateral in accordance with the Credit

Facility.

 

2.  “Indebtedness” defined. The word “indebtedness” is used herein

in its most comprehensive sense and includes, but is not limited to, any and

all advances, debts, obligations, and liabilities of BORROWER to LENDER,

including judgments against BORROWER by LENDER, whether currently existing or

arising at a later date, whether voluntarily or involuntarily created, and

however arising, and whether due or not due, absolute or contingent, liquidated

or unliquidated, determined or undetermined.

 

3.  Nature of Guarantor’s undertaking. The liability of Guarantor

hereunder shall be open and continuous for as long as this guaranty shall be in

force. Guarantor intends to guarantee at all times the performance of all

obligations of BORROWER to LENDER within the limits set forth above. Thus, no

payments made upon BORROWER’s indebtedness shall be held to discharge or

diminish the liability of Guarantor for any and all remaining and succeeding

indebtedness of BORROWER to LENDER. The liability of Guarantor hereunder shall

be joint and several with all other Guarantors hereunder, shall also be binding

upon Guarantor’s marital community (if any), and shall be enforceable against

both the separate and community property of Guarantor existing at the date of

execution hereof or hereafter acquired.

 

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4.  LENDER’s rights and obligations in dealing with BORROWER.

Guarantor authorizes LENDER to deal with BORROWER and BORROWER’s sureties,

endorsers, and other guarantors, in any manner in which LENDER sees fit in

connection with any indebtedness of BORROWER to LENDER, now or hereafter

created, without any further consent or authorization from Guarantor being

necessary. Specifically, but without limiting the powers of LENDER, LENDER may

make various types of secured or unsecured financing arrangements for BORROWER;

LENDER may extend the time for payment of any indebtedness of BORROWER, LENDER

may release any collateral given to LENDER by BORROWER, with or without the

substitution of new collateral; LENDER may release or agree not to sue

BORROWER’s sureties, endorsers, or other guarantors on any terms it chooses;

LENDER may sue or fail to sue BORROWER upon any overdue indebtedness or may

realize or neglect to realize upon any collateral held in connection therewith;

all of the foregoing without the necessity of any notice to or consent from

Guarantor and all without affecting Guarantor’s liability hereunder.

 

5.  Duration of guaranty. This guaranty shall take effect when

received by LENDER, without the necessity of any acceptance by LENDER, and

shall continue in full force until such time as Guarantor shall notify LENDER

in writing, at the office of LENDER to which this guaranty shall be delivered

in the first instance, of Guarantor’s election to terminate the same. Any such

election to terminate shall be effective only as to indebtedness incurred by

BORROWER to LENDER after receipt of such written notice; provided, that this

guaranty shall be effective even as to indebtedness incurred by BORROWER after

receipt of such written notice if LENDER committed itself to BORROWER in regard

to such indebtedness prior to receipt of such notice. This guaranty shall bind

the Guarantor for renewals and extensions granted after the termination hereof

which pertain to debts guaranteed hereby whether or not the renewals or

extensions are longer than the original period of the debts guaranteed

hereunder. This guaranty shall bind the estate of Guarantor as to indebtedness

created both before and after the death or incapacity of Guarantor; provided,

that 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. Termination of this guaranty by one of

the undersigned shall not affect the liability hereunder of the remaining of

the undersigned.

 

6.  LENDER’s rights against and obligations to Guarantor.

Guarantor hereby expressly waives presentment, protest, demand, or notice of

any kind, including notice of nonpayment of any of BORROWER’s indebtedness or

of any collateral thereto and notice of any action or nonaction on the part of

BORROWER, LENDER, or any surety, endorser, or other guarantor. Upon any default

of BORROWER on any obligation to LENDER, LENDER may, at its option, then and

there demand and be entitled to payment from Guarantor of the full amount or

any part of the amount of BORROWER’s indebtedness to LENDER, within the

limitations set forth above, and if Guarantor shall not pay the sum demanded to

LENDER, LENDER may proceed directly and at once against Guarantor to collect

such sum without first proceeding against BORROWER, or any surety, endorser, or

other guarantor and without foreclosing upon or selling or otherwise disposing

of any collateral it may have as security for any of BORROWER’s indebtedness.

Failure to make such demand at such time or so to proceed shall not relieve Guarantor

of its obligations hereunder or in any sense constitute a waiver. LENDER shall

have the right to demand and collect from Guarantor all or any portion of

BORROWER’s indebtedness and failure of LENDER at any time to demand from

Guarantor or to proceed to collect from Guarantor the full amount of BORROWER’s

indebtedness from Guarantor shall not preclude LENDER from later demanding or

proceeding to collect from Guarantor any remaining indebtedness of BORROWER to

LENDER covered by this guaranty. In any action or suit against Guarantor to

enforce this guaranty, LENDER shall be entitled to recover from Guarantor, in

addition to costs and disbursements allowed by law, a reasonable amount for

LENDER’s attorney’s fees in such action or suit or appeal therefrom. In any

action or suit brought by LENDER against Guarantor, Guarantor will not assert

as a defense any statute of limitations if at the time the action or suit is

commenced there is outstanding any indebtedness of

 

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BORROWER to LENDER which is not barred by the

statute of limitations of the State of Washington. If payment is made by

BORROWER on a debt guaranteed hereby and thereafter LENDER is forced to remit

the amount of that payment to the BORROWER’s trustee in bankruptcy or similar

person under any federal or state bankruptcy law or law for the relief of

debtors, the BORROWER’s debt shall be considered unpaid for the purpose of

enforcement of this Guaranty.

 

7.  Subordination of Guarantor’s rights against BORROWER.

Guarantor agrees that the indebtedness of BORROWER to LENDER, whether now

existing or hereafter created, shall be and the same hereby is declared to be

prior to any claim that Guarantor may now have or hereafter acquire against

BORROWER, whether or not BORROWER becomes insolvent, and Guarantor shall and

does expressly subordinate such 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 any assignee or trustee in bankruptcy

of BORROWER; provided, that such assignment shall be effective only for the

purpose of assuring to LENDER full payment of all indebtedness of BORROWER to

LENDER.

 

8.  Assignment of Guaranty. Assignment by LENDER of all or part of

the indebtedness shall transfer to the assignee all benefits of this Guaranty

as to the portion of the indebtedness assigned. This Guaranty shall remain in

effect in favor of LENDER as to the portion of the indebtedness not assigned.

 

9.  Releases and Waivers. Guarantor hereby expressly and irrevocably

releases and waives any and all “claims” (as now or hereafter defined in the

United States Bankruptcy Code, 11 USC 101 et.seq.) of any nature whatsoever,

whether known or unknown and whether now existing or hereafter acquired,

against any debtor or the estate in any existing or future bankruptcy case in

which the debtors include BORROWER or any person or entity with respect to whom

Guarantor is an “insider” (as now or hereafter defined in such Bankruptcy

Code), to the extent such claims in any manner relate to or arise out of this

Guaranty or any indebtedness guaranteed hereby (including but not limited to

fixed or contingent claims based on subrogation, indemnity, reimbursement,

contribution or contract). Guarantor authorizes and empowers LENDER to at any

time exercise, in its sole discretion, any right or remedy or any combination

thereof which may then be available to LENDER; Guarantor agrees that nothing

contained herein shall prevent LENDER from suing on any indebtedness instrument

or from exercising any right or remedy available to LENDER thereunder, and

Guarantor further agrees that the exercise of any such rights or remedies shall

not constitute a legal or equitable discharge of Guarantor. It is Guarantor’s

intent and purpose that the obligation hereunder shall be absolute,

independent, and unconditional under any and all circumstances.

 

Notwithstanding any

foreclosure of any lien on real or personal property securing any indebtedness

guaranteed hereby, whether by the exercise of a power of sale, by an action for

judicial foreclosure or by acceptance of a deed in lieu of foreclosure,

Guarantor shall remain bound under this Guaranty.

 

Guarantor acknowledges that

LENDER’s financing for BORROWER is of substantial and material benefit to

Guarantor, that Guarantor has been informed and believes that LENDER would not

provide financing for BORROWER but for this Guaranty and the representations,

acknowledgments, releases, waivers and agreements contained herein, and that

LENDER will rely on all such representations, acknowledgments, releases,

waivers and agreements in providing financing for BORROWER.

 

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10. Indebtedness continued. The

term “indebtedness” as defined in paragraph 2 above includes, but is not

limited to, all existing and future obligations and liabilities of BORROWER

under the Credit Facility between BORROWER and LENDER referenced above, a copy

of which is attached to this Guaranty.

 

11. Disputes. This Guaranty shall

be governed by and construed and enforced in accordance with Washington Law.

Notwithstanding any arbitration under the Credit Facility, any legal action

taken in connection with this Guaranty shall be commenced in Spokane,

Washington, and the parties agree that they will be subject to the jurisdiction

of the Courts of Spokane County, Washington.

 

 

	

  /s/Michael

  A. Kirk

  	

   

  
	

  Michael

  A. Kirk, Guarantor

  	

   

  
	

   

  
	

   

  
	

  /s/Douglas

  B. Durham

  	

   

  
	

  Douglas B. Durham, Guarantor

  	

   

  
	

   

  
	

   

  
	

  /s/Colleen

  D. Durham

  	

   

  
	

  Colleen D. Durham, Guarantor

  	

   

  
			

 

5EXHIBIT

10.13

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (“Amendment”)

is made and entered into by and between USANA Health Sciences, Inc., a Utah

corporation (“Borrower”) and Bank of America, N.A., a national banking association

(“Bank”).

 

Recitals

 

A.    Borrower and Bank are parties to that

certain Credit Agreement dated September 20, 1999 (as amended or otherwise

modified, the “Credit Agreement”) pursuant to which, among other things, Bank

made available a revolving line of credit in the amount of $12,500,000 and a

term loan to Borrower in the amount of $10,000,000.

 

B.    The Credit Agreement contains certain

financial covenants binding upon the Borrower, including a minimum fixed charge

coverage ratio.

 

C.    Borrower has requested that Bank agree to

modify the fixed charge coverage ratio, which Bank has agreed to do on the

terms and conditions herein contained.

 

NOW THEREFORE, in

consideration of the foregoing, Borrower and Bank agree as follows:

 

Agreement

 

1.     DEFINED TERMS. 

Capitalized terms not otherwise defined herein shall have the meanings

given in the Credit Agreement.

 

2.     AMENDMENT TO CREDIT AGREEMENT. 

Section 1.10 of the Credit Agreement is amended and restated to

read as follows:

 

1.10        Fixed

Charge Coverage Ratio shall mean:

 

(a)       as of the end of each of Borrower’s

fiscal quarters ending March 31, 2001 through December 29, 2001, the

ratio of (i) the sum of (A) EBITDA of Borrower less (B) the sum of

(1) fifty percent (50%) of the capital expenditures made by Borrower plus

(2) the provision for taxes based on income made by Borrower to

(ii) the interest expense of Borrower, in each case, for the period of

four consecutive fiscal quarters then ended;

 

(b)       as of the end of each of Borrower’s

fiscal quarters ending March 30, 2002 through December 31, 2002, the

ratio of (i) the sum of (A) EBITDA of Borrower less (B) the sum of

(1) the provision for taxes based on income made by Borrower for the

period of four consecutive fiscal quarters then ended plus (2) as applicable

(A) for the fiscal quarter ended March 30, 2002, the product of

(x) the capital expenditures made by Borrower during the fiscal then

quarter multiplied by (y) four, (B) for the fiscal quarter ended

June 30, 2002, the product of (x) the capital expenditures made by

Borrower during the period of two consecutive fiscal quarters then ended

multiplied by (y) two, (C) for the fiscal quarter ended

September 30, 2002, the product of (x) the capital expenditures made

by Borrower during the period of three consecutive fiscal quarters then ended

multiplied by (y) one and thirty four one hundredths, and (D) for the

fiscal quarter ended December 31, 2002, the capital expenditures made by

Borrower during the period of four consecutive fiscal quarters then ended to

(ii) the sum of (A) the interest expense of Borrower for the period

of four consecutive fiscal quarters then ended plus (B) the current

portion of long-term Debt of Borrower as of such date; and

 

(c)       as of the end of each of Borrower’s

fiscal quarters ending March 30, 2003 and thereafter, the ratio of

(i) the sum of (A) EBITDA of Borrower less (B) the sum of

(1) the capital expenditures made by Borrower plus (2) the provision

for taxes based on income made by Borrower, in each case for the period of four

consecutive fiscal quarters then ended to (ii) the sum of (A) the

interest expense of Borrower for the period of four consecutive fiscal quarters

then ended plus

(B) the current portion of long-term Debt of Borrower as of such date.

 

 

3.     CONDITIONS TO EFFECTIVENESS. 

Notwithstanding anything contained herein to the contrary, this

Amendment shall not become effective until each of the following conditions is

fully and simultaneously satisfied:

 

(a)   Delivery of Amendment.  Borrower and Lender shall have executed and

delivered counterparts of this Amendment to each other;

 

(b)   Corporate Authority.  Lender shall have received such evidence of

corporate authority and action as Lender shall request demonstrating that the

execution, delivery and performance of this Amendment has been duly authorized

by Borrower;

 

(c)   Representations True; No Default.  The representations of Borrower as set forth

in Article 7 of the Credit Agreement shall be true on and as of the date

of this Amendment with the same force and effect as if made on and as of this

date.  No Event of Default and no event

which, with notice or lapse of time or both, would constitute an Event of

Default, shall have occurred and be continuing or will occur as a result of the

execution of this Amendment; and

 

(d)   Other Documents.  Lender shall have received such other

documents, instruments, and undertakings as Lender may reasonably request.

 

4.     REPRESENTATIONS AND WARRANTIES. 

Borrower hereby represents and warrants to Lender that each of the

representations and warranties set forth in Article 7 of the Credit

Agreement is true and correct in each case as if made on and as of the date of

this Amendment and Borrower expressly agrees that it shall be an additional

Event of Default under the Credit Agreement if any representation or warranty

made hereunder shall prove to have been incorrect in any material respect when

made.

 

5.     NO FURTHER AMENDMENT. 

Except as expressly modified by this Agreement, the Credit Agreement and

the other Loan Documents shall remain unmodified and in full force and effect

and the parties hereby ratify their respective obligations thereunder.

 

6.     RESERVATION OF RIGHTS. 

Borrower acknowledges and agrees that the execution and delivery by Bank

of this Agreement shall not be deemed to create a course of dealing or

otherwise obligate Bank to forbear or execute similar amendments under the same

or similar circumstances in the future.

 

7.     MISCELLANEOUS.

 

(a)           This Agreement comprises the entire

agreement of the parties with respect to the subject matter hereof and

supersedes all prior oral or written agreements, representations or

commitments.

 

(b)           This Agreement may be executed in any

number of counterparts, all of which taken together shall constitute one and

the same Agreement.

 

(c)           This Agreement and the rights and

obligations of the parties hereto shall be construed and interpreted in

accordance with the internal laws of the State of Washington.

 

EXECUTED AND DELIVERED by the duly

authorized officers of the parties as of the date first above written.

 

Dated as of

April 17, 2002.

 

	

  Borrower:

  	

   

  	

  Bank:

  
	

   

  	

   

  	

   

  
	

  USANA

  HEALTH SCIENCES, INC.

  	

   

  	

  BANK

  OF AMERICA, N.A.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/

  Gilbert A. Fuller

  	

   

  	

  By:

  	

  /s/

  Mark N. Crawford

  	

   

  
	

   

  	

  Gilbert

  A. Fuller, SVP & CFO

  	

   

  	

   

  	

  Mark

  N. Crawford, Senior Vice President

  

 

2

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