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DOWNEY BRAND LLP
JAMIE P. DREHER (Bar No. 209380) FiLED
2 CONNOR W. OLSON (Bar No. 291493)
621 Capitol Mall, 18th Floor Sacramento
3 Sacramento, CA 95814-4731
Telephone: (916)444-1000
4 Facsimile: (916)444-2100
jdreher@downeybrand.com Deputy
5 colson(@downeybrand.com
6 AttomeysforPlaintiff
CALIFORNIA BANK & TRUST
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9 SUPERIOR COURT OF CALIFORNIA
10 COUNTY OF SACRAMENTO
11 UNLIMITED JURISDICTION
12 CALIFORNIA BANK & TRUST, a Califomia CASE NO.
corporation,
13 COMPLAINT FOR:
Plaintiff,
14 1. CLAIM AND DELIVERY;
15 2. BREACH OF CONTRACT;
VSS COUNTERTOPS, INC., a Califomia
16 corporation; DUANE TUCKER, an individual; 3. UNJUST ENRICHMENT; AND
MARCIA TUCKER, an individual; and DOES
17 1 through 50, Inclusive, 4. BREACH OF GUARANTY.
18 Defendants.
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Plaintiff Cahfomia Bank & Trust ("CB&T") complains and alleges as follows:
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PARTIES
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1. CB&T is, and at all relevant times was, a coiporation organized and existing under
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the laws of the State of Califomia with its principal place ofbusiness in Califomia.
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2. CB&T is infomied and believes, and based thereon alleges, that Defendant VSS
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Countertops, Inc., ("VSS") is, and at all relevant times was, a corporation organized and existing
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under the laws of the State of Califomia with its principal place ofbusiness in California.
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3. CB&T is informed and believes, and based thereon alleges, that Defendants Duane
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1410344.1 J
COMPLAINT
1 Tucker and Marcia Tucker (together "Tuckers") (VSS and Tuckers will be referred to as
2 "Defendants") are individuals residing in Califomia.
3 4. The tme names and capacities, whether individual, corporate, associate or
4 otherwise of defendants Does 1 through 50, inclusive, are unknown to CB&T who therefore sues
5 said defendants by such fictitious names. CB&T is infonned and believes and thereon alleges
6 that each of the defendants designated herein as a fictitiously named defendant is, in some
7 manner, responsible for the events and happenings herein referred to, either contractually or
8 tortiously, and caused damage to CB&T as herein alleged. When CB&T ascertains the true
9 names of Does 1 through 50, inclusive, it will seek leave of this Court to amend its complaint by
10 setting forth the same.
11 5. CB&T is infomied and believes, and based thereon alleges, that at all relevant
12 times, except as otherwise alleged, Defendants and DOES 1 -50, and each of them, were acting as
13 the agents, co-partners, servants, employees, directors, and officers of each of the other
14 defendants, and were acting within the full course and scope of their agency, partnership,
15 employment, or other relationship with the full knowledge, consent and permission, either
16 expressed or implied, of the other Defendants in perfomiing the acts alleged herein. Each
17 reference in this Complaint to "Defendant," "Defendants," or a specifically-named Defendant
18 also refers to all Defendants sued under fictitious names.
19 VENUE AND JURISDICTION
20 6. This Court has subject matter jurisdiction over this action, personal jurisdiction
21 over Defendants, and venue is proper based on the fact that the loan agreement, which is the
22 subject of this action, was entered into and was to be perfomied in the County of Sacramento.
23 Moreover, Defendants expressly consented in the loan agreement to jurisdiction and venue in the
24 County of Sacramento.
25 GENERAL ALLEGATIONS
26 7. In consideration for a loan in the original principal amount of $815,000.00 from
27 CB&T (the "Loan"), VSS made, executed, and delivered to CB&T a promissory note (the
28 "Note") on January 26, 2011. Pursuant to the Note, and based on an initial interest rate of 6.00%
1410344.1 2
COMPLAINT
1 (the prime rate) plus 2.75%, VSS was obligated to make principal and interest payments of
2 $9,048.98 every month. Pursuant to the Note, the interest rate is adjusted each year, and is equal
3 to the then prime rate plus 2.15%. Also pursuant to the Note, payments which are more than 15
4 days late subject VSS to a late fee of up to 5.00% of the unpaid portion of the regularly scheduled
5 payment. The Tuckers are guarantors on the Note. A true and conect copy the Note is attached
6 hereto as Exhibit A and is incorporated herein fully by this reference.
7 8. Also on or about January 26, 2011, Defendants Duane Tucker and Marcia Tucker,
8 for valuable consideration, each made, executed, and delivered to CB&T separate unconditional
9 guarantees (together the "Unconditional Guarantees") whereby the Tuckers, each personally and
10 unconditionally guaranteed payment to CB&T of all amounts owing under the Note. Pursuant to
11 the ternis of the Unconditional Guarantees, the Tuckers are required to pay all amounts due under
12 the Note when CB&T makes written demand, and CB&T is not required to seek payment from
13 any other sources before demanding payment. True and con-ect copies of the Unconditional
14 Guarantees are attached hereto as Exhibit B and are incorporated herein fully by this reference.
15 9. Also on or about January 26, 2011, VSS, for valuable consideration, made,
16 executed, and delivered to CB&T a Commercial Security Agreement (the "Security Agreement")
17 to fiarther secure payment of the Note. Pursuant to the Security Agreement, VSS granted to
18 CB&T a security interest in the "Collateral" as that terni is defined therein. A tme and correct
19 copy of the Security Agreement is attached hereto as Exhibit C and is incorporated herein fully
20 by this reference.
21 10. The Note and Security Agreement and any modifications or ainendments provide
22 that should a default in payment occur in the payment of any installment when due under the said
23 documents, CB&T, without any notice and/or opportunity to cure by VSS, is immediately entitled
24 to declare the entire unpaid balance under the Note and all accrued unpaid interest immediately
25 due.
26 11. On or about Febmary 4, 2011, CB&T perfected its security interest in the
27 Collateral by preparing and filing a UCC Financing Statement ("Fonn UCC-l") with the
28 Califomia Secretary of State. A tme and correct copy of the Fonn UCC-l is attached hereto as
1410344,1
COMPLAINT
1 Exhibit D and is incorporated folly herein by reference.
2 12. On or about April 24, 2015, CB&T filed a UCC Financing Statement Amendment
3 ("Amendment to Form UCC-l") whereby CB&T deleted certain Collateral. A true and correct
4 copy of the Amendment to Form UCC-l is attached hereto as Exhibit E and is incorporated
5 herein fully by this reference.
6 13. On or about March 2, 2015, VSS, for valuable consideration, made, executed, and
7 delivered to CB&T a Change in Terms Agreement (the Change in Terms Agreement, togetlier
8 with the Note, Security Agreement and any modifications or amendments thereto are collectively
9 referred to herein as the "Loan Documents") whereby the original tenn under the of the Loan,
10 reflecting the principal amount of $815,000.00, was changed to the principal sum of $465,390.40.
11 Pursuant to the Change in Terms Agreement, VSS' monthly payments, firom April 4, 2014
12 through Febmary 4, 2015, were deferred until maturity; all other monthly principal and interest
13 payments resumed March 4, 2015. A tme and correct copy of the Change in Tenns Agreement is
14 attached here as Exhibit F and is incorporated herein fiilly by this reference.
15 14. In connection with the Change in Tenns Agreement, the Tuckers, for valuable
16 consideration, made, executed, and delivered to CB&T a Reaffinnation of Guaranty Obligations
17 (each reference in this Complaint to "Unconditional Guarantees" also refers to the Reaffirmation
18 of Guaranty Obligations), whereby the Tuckers reaffirmed their obligations as guarantors. A true
19 and correct copy of the Reaffirmation of Guaranty Obligations is attached hereto as Exhibit G
20 and is incorporated herein fiilly by this reference.
21 Defendants' Defaults Under the Loan Documents and the Unconditional Guarantees
22 15. Pursuant to the Loan Documents, Defendants became obligated to pay the
23 principal sum of $465,390.40 together with interest on the unpaid principal balance fi-om January
24 26, 2011, until paid in foil.
25 16. On April 4, 2015, VSS failed and refused to make a scheduled payment of
26 $8,146.74, and the required monthly payments and their applicable late fees in subsequent
27 months, up to and including present, which amounts to $24,440.22. VSS is thus in default under
28 the terms of the Loan Documents. By reason of these defaults, CB&T has elected to declare the
1410.344.1
COMPLAINT
1 whole sum of principal and interest due under the Note immediately due and payable. The whole
2 sum due consists of a principal balance of $417,390.40 plus interest accruing at 6.00% percent
3 per annum, amounting to $644.40, for a combined total of $418,034.80 through June 4, 2015,
4 plus fees and expenses, which continue to accme. Interest and fees will continue to accme for
5 each additional dayfi-omthe date of filing to the date of entry of judgment.
6 17. The Tuckers have refosed to perfonn under the Unconditional Guarantees when
7 CB&T demanded that it pay the sums due by VSS under the Note.
8 18. Pursuant to the Loan Documents with respect to VSS and the Unconditional
9 Guarantees with respect to the Tuckers, Defendants are jointly and severally liable for the Loan
10 and actual and reasonable costs of collection, which include attorneys' fees and costs.
11 FIRST CAUSE OF ACTION
12 Claim and Delivery
13 (As Against VSS)
14 19. CB&T incorporates by reference the allegafions contained in paragraphs 1 through
15 18, as though folly contained herein.
16 20. CB&T has not yet repossessed the Collateral, nor is this Complaint based on any
17 claimed deficiency balance.
18 21. CB&T is infonned and believes and thereon alleges that the Collateial is now in
19 the possession of VSS. Before commencement of this action, on or about June 2, 2015, CB&T
20 demanded that VSS deliver possession of the Collateral to CB&T, but VSS refused to do so, and
21 still unjustly detains the Collateralfi-omCB&T.
22 22. By the tenns of the Loan Documents and the applicable provisions of the
23 Commercial Code, under which VSS pledged the Collateral, CB&T is entitled to immediate
24 possession of the CoUatei-al, as well as other applicable relief set forth in the Loan Documents
25 and/or the Commercial Code.
26 SECOND CAUSE OF ACTION
27 Breach of Loan Documents
28 (As Against VSS)
1410344,1 5
COMPLAINT
1 23. CB&T incorporates by reference the allegations contained in paragraphs 1 through
2 22, as though fully contained herein.
3 24. CB&T perfonned all acts required of it under the Loan Documents, except for
4 those excused by VSS' failure to perfonn.
5 25. .VSS breached the Loan Documents by failing to pay CB&T the amounts due and
6 owing under the Loan Documents without cause and in violation of the ternis of the Loan
7 Documents. Further, CB&T is infonned and believes, and based thereon alleges, that VSS has
8 violated other tenns of the Loan Documents in addifion to those specifically identified herein.
9 26. As a direct and proximate result of VSS' breaches of the Loan Documents, CB&T
10 has suffered damages in an amount not less than $417,390.40 in principal, $644.40 in interest,
11 through June 4, 2015, plus fees, costs and reasonable attorney's fees, which continue to accrue.
12 27. Under the tenns of the Loan Documents, VSS agreed to pay all of CB&T's costs
13 and expenses, including attorneys' fees, if any action was commenced to enforce the Loan
14 Documents.
15 28. By reason of the above-menfioned defaults by VSS, it has become necessary for
16 CB&T to employ Downey Brand LLP, attomeys duly licensed to practice in all the courts of
17 Califomia, to commence and prosecute this action.
18 THIRD CAUSE OF ACTION
19 Unjust Enrichment
20 (As Against VSS)
21 29. CB&T incorporates by reference the allegations contained in paragraphs 1 through
22 28, as though fully contained herein.
23 30. VSS has been enriched by thefondsreceived in exchange for the Loan
24 Documents.
25 31. VSS used thefondsreceived in exchange for the Loan Documents, but has failed
26 to folfill its obligations under those agreements. As a result, VSS' use of those funds has been
27 and continue to be unjust.
28 32. If VSS is allowed to retain thefondstaken, it will have been unjustly enriched at
1410344,1 6
COMPLAINT
1 CB&T's expense.
2 FOURTH CAUSE OF ACTION
3 Breach of Guaranty
4 (As Against the Tuckers)
5 33. Plaintiff incorporates by reference the allegations contained in paragraphs 1
6 through 32 inclusive as though folly contained therein.
7 34. On or about January 26, 2011, the Tuckers for valuable consideration, made,
8 executed and delivered to CB&T the Unconditional Guarantees. Pursuant to the Unconditional
9 Guarantees, the Tuckers agreed to absolutely and unconditionally guarantee the full and puncfoal
10 payment and satisfaction of the indebtedness owed by VSS to CB&T under the Note. Pursuant
11 to the Unconditional Guarantees, the Tuckersfortheragreed to absolutely and unconditionally
12 guarantee the perfonnance and discharge of all VSS' obligations under the Note and related loan
13 documents.
14 35. The Tuckers refused to perfonn under the Unconditional Guarantees when CB&T
15 demanded that it pay the sums due by VSS under the Note.
16 36. CB&T has duly performed all the conditions precedent on its pait to be perfonned
17 under the Loan Documents and the Unconditional Guarantees.
18 37. CB&T has been damaged as a result of the Tuckers breach of the Unconditional
19 Guarantees. Specifically, as of the date of this filing, the amount due, owing and payable under
20 the Unconditional Guarantees is $417,390.40 in principal, $644.40 in interest, through June 4,
21 2015, plus fees, costs, and reasonable attomey's fees, which continue to accrue.
22 38. The Unconditional Guarantees provides that in the event of a default thereunder,
23 the Tuckers are required to pay all attorney's fees incurred by CB&T in collecting any amounts
24 due.
25 39. By reason of the above-mentioned defaults by the Tuckers, it has become
26 necessary for CB&T to employ Downey Brand LLP, attomeys duly licensed to practice in all the
27 courts of Califomia, to coniiiience and prosecute this action.
28 PRAYER FOR R E L I E F
1410344,1 7
COMPLAINT
1 Wherefore, CB&T prays for judgment as follows:
2 AS TO THE FIRST CAUSE OF ACTION
3 1. For the retum of the Collateral;
4 2. For Judgment that the Security Agreement be foreclosed; for judgment for
5 possession of the Collateral by CB&T and/or sale or liquidation of the Collateral in accordance •
6 with the Califomia Commercial Code, and that the proceeds of the sale by applied to the payment
7 of the amounts due to CB&T and any other party to this acfion maybe become a purchaser at the
8 foreclosure sale, whether by auction or private sale.
9 3. That VSS is liable for payment of the obligations evidenced by the Loan
10 Documents, and that a deficiency judgment against it may be ordered following proceedings
11 prescribed by law.
12 4. Against VSS for attorney's fees and costs pursuant to the Loan Documents in the
13 amount the court adjudges reasonable.
14 AS TO THE SECOND CAUSE OF ACTION
15 1. Against VSS for the total sum of $417,390.40 in principal, plus $644.40 in interest
16 through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and interest at the
17 Note rate or the maximum legal rate, whichever is greater, fi'om the date said sums became due
18 and owing to the date of entry of judgment.
19 2. For addifional damages according to proof at trial.
20 3. Against VSS for attomey's fees and costs pursuant to the Loan Documents in the
21 amount the court adjudges reasonable.
22 AS TO THE THIRD CAUSE OF ACTION
23 1. Against VSS for the total sum of $417,390.40 in principal, plus $644.40 in interest
24 through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and interest at the
25 Note rate or the maximum legal rate, whichever is greater,fi-omthe date said sums became due
26 and owing to the date of entry of judgment.
27 2. For additional damages according to proof at trial.
28 3. Against VSS for attomey's fees and costs pursuant to the Loan Documents in the
1410.344,1 8
COMPLAINT
amount the court adjudges reasonable.
2 AS TO THE FOURTH CAUSE OF ACTION
3 1. Against the Tuckers for the total sum of $417,390.40 in principal, plus $644.40 in
4 interest through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and
5 interest at the Note rate or the maximum legal rate, whichever is greater,fi-omthe date said sums
6 became due and owing to the date of entry of judgment.
7 2. For additional damages according to proof at trial.
8 3. Against the Tuckers for attomey's fees and costs pursuant to the Uncondifional
9 Guarantees in the amount the court adjudges reasonable.
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DATED: June! J, 2015 DOWNEY BRAND LLP
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By:
'5 U Attorneys for Plainfiff
CALIFORNIA BANK & TRUST
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1410344,1
COMPLAINT
EXHIBIT "A"
U.S. Small Business Administration
U.S. $mcl( ciuumnD MfiinHtratici*
NOTE
S8A Loan # PLP44<>I03S0-0l
SBA Loan Name
VSS Indujtrics
Date
January 26, 20)1
Loan Amount' $ 815,000.00
Interest Rate
Wall Street Juui-nsl Prime Rate plus 2.75%
Borrower
VSS Countertops, Inc,
Operating Company
NVA
Lender
Califomia Rank & Trust
I, PROMISE TO PAY;
In reiuTii for the Loan, Borrower promises to pay to the order of Lender the amount of
Eight Hundred Fifteen Thousand and oo/.|oo**«»»"-'«»»«'*"-*"«'n.»»,.,,»>... Dollars,
interest on the unpaid principal balance, and all other amounts required by this Nofe.
2, DEFINITIONS:
"Collaicrnl" means sny property taken as security for paymait of this Klote or any guarantee of this Note.
"Guarantor" means each person who signs a guarantee of payment of this Noie.
"Loan" means the loan evidenced by this Note,
"Loan Documents" means the docuinents related to this loan signed by BoiTOWtr, any Guarantor, or anyone wlio
pledges collateral.
"SBA" means ihe Small Bu.sine«s Administration, an Agency of the United States of Ainorica.
SUA I'niri 147 (05/03/02) VcrslDii 4,1 Pngc 1/C
TKi torm viiRt littdftMiciMly prociLjcctl by CblfuDU JiaA 4 Tri«i
3. PAYMENT TERMS;
Borrower must make all payments at the place Lender designates. The payment terms for this Note are:
The Interest rate on this Note vM fluctuate. The Initial Interest rale Is 6.00% per year. This Initial rats Is the prime rale In effect
on thofirstbushess day of the montn in which SBA lecelvod the loan application, plus 2.75%. The initial Interest rats most
remain In efteci until the first change period t>egins.
Borrower must pay principal and inleresl payments of $9,046,98 every month, l>eginnlng one month from Ihe month of initial
disbursement on this Mole; payments must be made on the same day as ftus date of Inllial dlsbursen:ient on this Notti In the
months they are due.
Lender will sppi/ each Installment payment first to pay interest accrued to the day Lender receives the payment, than to bring
principal current, then to pay any late fees, and wlll apply any remaining balance to reduce principal:
The Interest rata will be sdiusted every calender quarter (the 'change period").
The "Prime Rale" Is the prime rate In elTecl on the tlrsl business day of the month (ss published In the Wall Street Journal) In
which SBA received Ihe eppllcatton. or any intorest rate change occurs. Base Rales will be rounded to two doclmal places
with .004 being rounded down and .005 being rounded up.
The adjusted interest rate wHl be 2,75% above the Prime f^ate. Lender will adjust the Interest rate on the first calendar day of
each change period. The change in Interest rata is effective on that day VKhether or not Lender gives Sorrower notice of the
change.
Lender must adjust the payment amount at jeasl annually as needed lo amortize principal over the re/naining term of the note.
If SBA purchases the guaranteed portion of (he unpaid principal balance, the interest rata becomes fixed at the rate in efrect at
the time of the earliest unoired payment defeult, if there is no uncured payment default, the rale becomesfixedat the rate in
effect at the time of purchase.
Loan Prepayment:
t>Jotwilhslanding any provision fn (tiis Note to fhe contrary:
Borrower may prepay this Note. Borrower may prepay 20% or less of the unpaid prfncipsl balance al any time without notice.
If Borrower prepays more than 20% ond the Loan has been Bold on the secondary market. Borrower must;
a. Give Lender wrillon notice;
b. Pay all accrued interest; end
c. If the prepayment Is received less than 21 days from the date Lender receives the notice, pay an amounl equal to 21 days'
Interest from lr\e date lender receives the nolice, less any Intensat accrued during the 21 days and paid under subparagraph
b., above.
If Borrower does nol prepay within 30 days from the date Lender receives the nolice, Bon-ower must give Lender a new notice,
AH remaining principal and accrued interest Is due and payable 10 years from date of Initial disbursement
Late Charge: If a payment on this Note Is more than 15 days late, Lender may charge Borrower a lata fee of up to 5.00% of
the unpaid portion of the reguJsrIy scheduled payment.
SUA Fonn 147 (06/03/02) Version 4.1 PoBC
Tns fam\ via d;ige Vi
Tni5formwos electronically p/oducod liy Cfljuomio Banv & Tmsi
10, STATE-SPECIFIC PROVISIONS:
Guarantor waives its rights of subrogation, reimbursement, Indemnification, aiid contribution and any
other rights and defonses that are or may become available to the guarantor by reason of California
Civil Code SecUons 2787 to 2855, inclusive,
The guarantor waives all rights and defenses that the guarantor may have because the debtor's debt is
secured by real property. This means, among other things:
(1) The creditor may collect from the guarantor without/irst foreclosing on any real or personal property
collateral pledged by the debtor.
(2) If the creditor forecloses on any t^al property collateral pledged by the debtor:
(A) The amount of the debt may be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if tho collateral Is worth more than the sale price.
(B) The creditor may collect from the guarantor even If the creditor, hy foreclosing on the real pixiporty
collateral, has destroyed any right tho guarantor may have to collect from the debtor.
This Is an unconditional and irrevocable waiver of any rights and defenses the gui>rentor may have
because the debtor's debt Is secured by real property. These rights and defenses includb, but are not
limited to, any rights or defenses based upon Section SSOa, 580b, 580d, or 726 of the Code of Civil
Procedure.
The guarantor waivoa all rights and defenses arising out of an election of remedies by the creditor, even
though that election of remedleSj such as a nonjudicial foreclosiire with respect to seciirity for a
guaranteed obligation, has destroyed tho guarantor's rights of subrogation and reimbursement against
the principal by the operation of Section S80d of the Code of Civil Procedure or otherwise.
.SBA l"otin I4S ( K V I S ) PrcWous I'tlitioiiv olvnilclt-. P-,1KC 4/5
Tills roitn vfon 4le;tro'nlc3llY prddtiCtid by CaDrurfg? Banit & Tmnl
11. GUARANTOR ACKNOWLEDGMENT OF TERMS.
Guarantor ackr.owledges that Guarantor has read'and understands the .significance of all terms of the Note and this
Guarantee, including all waivers.
12, GUARANTOR NAME(S) AND SIGNATURE(S):
By signing Below, each individual or entity becomes obligated as Guarantor under this Guarantee.
SUA l-orm 148 (10/98) Prcviiius alitions olwolcli:. Pugt S/S
nils rorm ttearorticAlly pfoduced by Ca;,torf)iH nonb A Trtiai
U.S. vSmall Business Administfation
UNCONDITIONAL GUARANTEE
SBA Loan it PLC 446J(13S0-01
SBA Loan Name VSS Industries
Guarantor Dunne L. Tucker
Borrower VSS Countertops, Inc.
Lender California Bank & Trust
•ate •lanuary 16, 2011
Note Amount $ 815,000.00
I. G U A R A N T E E :
Guarantor unconditionally guarantees payment to Lender o f all amounts owing under the Note, H i i s Guarantee remains
in effect until the Note is paid in dill. Guatnnlor must pay all amounts due undOr tho Noie when Lender makes written
demand upon Guarantor. Lender is not required lo seek payment from any other source before demanding payment from
Cunrantor.
2. NOTE:
Tlie "Note" is the promissory note dated January 26, 2011 In the principal amount of
****^„1i/,*tr»li^»*tr1Hr*.A'j,tHr*, DOllat^
Eight Hundred Fifteen Thousand and 00/100*
from BoiTOwer to Lender. It includes uny assumption, renewal, sub-ttitution, or replacement of the Note, and multiple
notes under a line of credit.
2 DEFINITIONS;
"Collateral" means any property taken as security' for payment of this Note or any guarantee of thi's Note.
"Loan" means the loan evidenced by this Note.
"Loan Documents" means the doc.ument,W•";:*^^•K •.w^-Vv-.v-
References In the boxes above ere tor Lender's use only and do not limit tha applicability of tills document to any pnriicular loen oi Item,
Any Item above comalnlnc has been omitted dus to text lenQth limitations.
Grantor: V S S Countertops . Inc. Lender: CalKomla Bank & T r u s t
7 6 4 0 Wilbur Way C o m m u n i t y Oevfltopment Business Croup
S a c m m e n t o , CA 9 5 8 2 6 2 3 9 9 G a t o w a y Oaks Dr(v«
Sulto 1 1 0
Sacramento, CA 9 5 8 3 3
THIS COMIVIERCIAL SECURITY AGREBVIENT dated January 2 6 , 2 0 1 1 , is made a n d oxecutsd b e t w e e n V S S C o u n t e r t o p s , Inc, ("Gronror") nnd
Callfomln Bonk a Trust ( " L o n d o r " ) ,
GRANT OF SECURITY INTEREST, f o t valuable concideratlon, Qrantor grems t o Lender a security I m e f e s t In the Collateral to secure the
Indebtedness and agrees t h a t Lender shall have ths rights s t a t e d In this Agreement w i t h respect to the Collateral, In addition to all other rights
w h i c ^ Lender m a y hevo bv l a w .
COLLATERAL OESCRIPTIOfJ. Tha virord "Collateral" es used in this Agrooment menns Ihe tollowing daBcribaO p r o p e r l v , vvhether now o w n e d or
twroofior acquired, w h e t h e r nov^ existing or hereafter erising, and wherever located. In w h i c h Grantor Is giving to Lender a security interest tor
the payment o( tho Indebtedness ond performance of all other obligations under the N o w and this A g r e e m e n t ;
All equipment and general Intangibles (Including but not l i m i t e d to all s o f t w a r e and ell payment Intangibles); all fixtures; all attachments,
accessions, accBssorlse, f i t t i n g s , increases, tools, parts, repairs, supplies, end comrtilnglod goods relating to the foregoing property, nnd nil
additions, replacements of ond substitutioru for all or any p a r t of the l o r e g o l n g property: all I n s u m n c e refunds relating to tho torogoing
p r o p e n y ; all g o o d w i l l relating to tlie foregoing property; ell records a n d data o n d embedded s o f t w a r e relating t o the forugolng property, and
all equipment, i n v e n t o r y and s o f t w a r e to utilize,, create, maintain end process any such r e c o i d t and d a t a on electronic media; and all
supporting obligBtions relating to the foregotng property; all w h e t h e r now existing or hereafter arising, w h e t h e r n o w o w n e d ot heronftei
acquired or w h e t h e r n o w or hereafter subjeot t o any rights in the foregoing property: and all p r o d u c t s and proceeds llncluiUng b u t not
limited to all Insurarice p s y m e n t a l of or relating to the f o r e g o i n g property.
1) . Seico EB 1 0 0 Ponel S a w
2) . One (1) N o w Blesse SeIco UUVT 6 0 0 Rear Loading S a w
3) . One 12xG 50PSI Side Loading Motorized Air Pod Press and one 12x5 Loading Fixed Air Pod Press w i t h serial numbers 3 3 9 6 0 S
and 3 3 9 6 B B
41. A k r o n 8 B 5 Edgebander w i t h serial number 8 6 7 8 6 1 , 1 lone) Kir Corner Rounding M o t o r s . 10;^ rnm Cotter i-leadsTogother w t t h all
s u b s t i t u t i o n s a n d replacements
51. Bittsse Rover C 9 . 8 5 FT, together w i t h all e t t a c h m e n t s , tooling accecsotlee, appurtenences and a d d l d o n s thereto
o 6 ) , Dantherm O u s t Collection System- equipped w i t h Heavy Duty Bsghouse. NRS-10 Alr-iook w i t h 4 ' Drop C h u t e , S 6 6 - 5 0 0 w i t h BO HP
Motor, Variobte Froquor\cy Driue, 2 HP Regeneration Fan, PLC Comrol Panel, 8 ' Clearance S u p p o r t S t r u c t u r e , and all standard and
additional parts, a t t a c h m e n t s and acoessorles
7 ) . Norfab Q u l c k - R t Laser Welded Beam Pipe- equipped w i t h ell standard end any addttioniil parte, a t t a c h t n e n t t and accessoiies
8) . Hyster S 8 0 X M B C S ' 0 5 ForklHt - serial #FOO4V03O70C
9 ) , Hyster S 8 0 X M ' 0 * Forklift - serial # F 0 0 4 V O t 9 0 3 B
101. One (1) A u t o q u i p Soissars Lift - Model feOSSO-EXWSP, One | 1 ) A u t o q u i p Scissors U f t - M o d o l J ! ^ 4 8 S 6 0 , One (1) Autoqulp Scissors
Lift - Model #4OO0LB Capacity, w t t h all standard and any additional parts, attaohmonts and accossorlas
11), One (11 Mow Black Grothars 1 0 ' X 4 ' Press and One (1) N e w Contfol Zone Option 4 ' X 8 '
In addition, the w o r d "Cotleteral" also Includes all the t o l l o w i n g , w h e t h e r now o w n e d or heieattcr acquired, w h e t h e r n o w existing or heropfter
eriaing, and w h e r e v e r l o c a t e d :
(Al All accessions, a t t a c h m e n t s , accessories, tools, parts, supplies, raplncemente of and additions to any o f the collateral described herein,
w h e t h e i added n o w or later,
IB) -All products and produce o f any of tho property described In this Collateral section.
(Cl All accounts, general intangibles, instrumente, rente, m o n i e s , paymBnta, and-all other rtghis, arising o u t o< a oelo, l«Bse, conslgnmerit
or other disposition of a n y o t tho property described In this Collateral section,
(01 All proceeds (including insurance proceeds) trom the sole, destruction, l o s s , or other diaposltlon of any.of the propertv described In this
Collateral s e c t i o n , and s u m s dus i r o m a third party \ut\o has damaged or destroyed the Collotsrol or f r o m t h a t p a n y ' s insurer, whethor due
t o judgment, s e t t l e m e n t or other process.
(E) All records and data relating to any of the property described In this Collateral section, w h e t h e r In the f o r m ot a w i l t i n g , photograph,
m i c r o f i l m , m l c r o t l c h e , o r eieclronic media, togothsr w i t h all ot Grantor's right, title, and Interest In and to all c o m p u t s r software mquired to
utilize, create, m a i n t a i n , and process sny such records or data on electronic m e d i a .
GRANTOR'S REPRESENTATIONS A N D WAnRAI^JTIES W I T H RESPECT T O THE C O L L A T E R A L W i t h respect to the Collateral, Grantor ropiesBntn
and promise.*) to Lender t h a t :
Perfection o f Security Interest. Grantor agrees to take w h a t e v e r actions ere roquostcd by Lender to p e r f e c t snd continue Lender's security
Intereet In tho CollaierBl. Upon request of Lender, Grentor w i l l deliver (o Lender any and ell of the d o c u m e n t s evidencing or constituting tho
Collateral, and Grantor will note Lender's Inteieat upon any and all chette! paper end Instruments if not delivered to Londor lor possosuion
by Lender.
Notices to Lender. G r s n t u r w i l l p r o m p t l y notify Lender In w r i t i n g et Lender's eddress s h o w n above (or s u c h oriter addresses ss Lender msy
designate i r o m time to time) prior to any ("I chengo In Grantor's name; 12) change in Grantor's a s s u m e d business narnels); 13) change
in the manegoment o f tho Corporation Grantor; (4) change In the eutboriied .lignerlsl; (51 change in G r a n t o r ' s principal office address;
(61 change In G r a n t o r ' s state ot organization: (7) conversion of Grantor to a new or different type of business entity; or (8) chsnge In
any otlier aspect o f Grantor that directiy or IndlrecHy relates to' any agieements b e t w e e n Oramor and Lender. No change In Grantor's name
dcr^MERCIAL SECURITY AGREEMEIMV"''
Loan No: 0758647-9001 (Continued) Pago 2
or state of organization will take effect until after Lender has recolved notice.
No Violation. The execution and delivery ot this Agreement will not vloleie any lew or agreement govorning Grantor or to which Grentor is
a party, and Its cerdficatc or articles of incorporution and bylaws do not prohibit any term or condition of this Agreement.
Enforcaabllitv of CollatBral, To me extenv-the Collateral consists of scfiounts, chattel paper, or gerveral Intnnglbies, es defined by iho
Uniform Cornmerclel Code, the Collateral is enforceable In accordance with Its terms, is genuine, and fully complies with all applicable laws
and regulations concerning form, content and manner of proparotlon. and execution, ond sll persons appearing to be obllgsind on the
Collateral have authority and cepectty to ccnrrsct snd ere In fact obligated es they appear to be on the Collateral. There shell be no aetofts
or Doumerclalms against any ol tho Collateral, and no ogroom«ni shall have been made under v^hich any deductions or discounts may bo
claimed concerning the Collateral except IhoEii disclosed to Lender In'writing.
Location of the Collateral. Except in tho ordinary course of Grentor'3 business, Grentor agrees to keep the Colleteral (or to tho extent tho
Collateral consists of intangible property such as accounts ur general intangibles, the.records concerning the CollatsrnI) et Grantor's
address shown above or at such other locations as are acceptable to Lender. Upon Lender's request. Grantor will dcllvor to Lender In form
satisfactory lo Lender a schedule.of reel properties and Collateral locations relating to Grentor's operations, including without limitation tho
following: ( I I all reel property Grentor owns or Is purchasing; (2) ell reel propeny Grantor Is renting or leasing; (31 ell sloisge faollltiec
Grantoi owns, rents, teases, or uses; snd 141 all other properties where Collateral Is or may be located.
Removal of the Collateral. Except In the ordinary couiee ol Grantor's business. Grantor shall not remove the Collaterol from its existing
location withoul Lender's prior written consent. To the oxtont that the Collateral consists of vehicles, or other titled propertv, Grnntot shall
not toko or permit eny action which would require appilcBtlon for certificates o l title for the vehicles outside the State ot Calilornla, without
Lender's prior written consent. Grantor shall, whenever requested, advise Lender of tho exact Incotion of the Collotorel.
Transactions Involving Collateral, Except for inventory sold or accounts collected in the ordlnery couise of Grantor's business, or as
othorwiSH provided for in this Agreement, Grentor shall not sell, olier TO sell, or otherwine transfer or dispose ol tho Colleteral, Grentor
shall not pledge, mortgoge, cnnumbor or otherwise. permit the Colleteral to be eubjoct to any lien, security interest, encumbience. or
charge, ottier than the security intorest provided lor in this AgreBmeiit, withoul the piior written consent of Lender. This Includes security
interests oven if junior In right to the security interests granted under this Agreement. Unlaas waived bv Lender, all proceeds from any
disposition ot the Colleteral (tor whatever roaaon) shall be held In trust for Lender and shall not bo commingled with any othei funds;
provided however, this requirement shall not constitute consent by Lender to any sale or other disposition, Upon receipt. Grantor shell
immediately deliver any such proceeds to Lender.
TKle, Grantor represents and warrants to Lender that Grantor holds good and meritetable title to the CQllstorsI, free and clear of oil lianc
and encumbrances except tot the lien of this Agreement. No financing statement r.ovorlng any of the CollaterBl Is on file in any public
offlco other than those which reflect the security interest created by this Agreement or to which Lender has epeciftcelly consented.
Grentor shall defend Lender's rights In the Colleteral egeinst the claims and demands of all other persons!
Repairs end tviaintenanco. Grentor agrees to keep and maintain, and to cause othors-to keep ,ond molnrain, tt-ie Colleteral In good order,
repair and condition at all times while this Agreement remains in effect. Grantor lurther agrees to pay when due all clelms lor work done
on, or services rendered or msterlsl lurnlshed in connection with tha Collateral so that no lion or oncumbranoe may over attach tu ot bo
filed against the Colleteral,
Inspection o'f CoOotoral. LerKlor and Lender's deBlgnated represontatlvRs end agents ohall have the right et ell reosoneble rimes lo examine
and inspect the Collaterel wherever located.
Taxes, Assessments and Liens. Grantor will pay when due ell taxes, sseeesmonts and liens upon tho Colleteral, its uso or operation, upon
this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any ol the other Related Documents. Grantor
may withhold any such payment or may elect to contest any lien If Grantor is In good felth conducting an Rppraprlote proooeding to contest
- the obligation to pay and so \ong as Lender's Imorest in the Collnteral is not jeoperdlted In Lender's cole opinion. If the Collatorel Is
Bubjected to a lien which Is not discharged within fifteen (15) days, Grantor shell deposit with Lender cash, e sufiiclent corporate surety
bond or other eecurlty satisfactory to Lender in an amount edequate to provide for the discharge of the lien plus an^ Interest, costs,
attorneys' fees or other charges that could accrue as a result ot (oreclosuro or sale o4 tho Collateral. In any contest Grantor shall defend
Itself snd Lender and shall satisfy any (Inal adverse Judgment before enforcement against the Collateral. Grantor shall noma Lender as en
additional obligee under any surety bond furnished In the contest proceedings. Grantor further agrees to turnlsh Lender with evidence thai
such taxes, essessmente, and goverrwnemsi and other charges have been-paid In lull and In e timolv manner, Qremoi may whhhold eny
4uch payment or may elect to contest any lien if Grantor is In good faith conducting an apptoprlale proceeding to contest the obligation to
pay end so long as Lender's Intereet in the Collateral Is not jeopardized.
Compilonce whh Governmental Requirements. Grantor shall comply prompliy with all laws, ordinances, rules and regulations ol ell
governmental authorities, now or herecher in effect, epplicebie to the ownership, production, disposition, or use of the Colioterel, Including
all laws or regulations relating to the undue erosion of highly-erodlble lend or reletlng to. ttie conversion of ,wetlBnd3 tor tho production ol an
sgrlculiural product or commodity. Grantor may contest in good faith any such law, ordlnsnco or legulation nrul withhold oompliohce
during any proceeding. Including appropriate appeals, so long es Lender's Interest In the Collateral, In Lender's opinion. Is nor jeopardized.
Hazardous Subsrancos. Grantor represents end warrants thet the Collsterel never has bean, and never will be so long as this Agroemoni
remains a lian on tlie Collaterol, used In'violation ot any Environmental Lews or for tha generation, monufecture, storoge, iransportotion,
treatment, disposal, release or dirsatoned release of any Hazardous Subetancc. The roprosentedons and warranties contained herein ere
based on Grentor's due diligence in investigating Ihe Collateral for Hazardous Substencas, Grantor hereby (1) releases and waives any
future oloims against Lender for indsmniiy or contribution in the event Grontor becomes liable fqi cleanup or other costs under ony
Environmental Laws, end (21 agrsae to Indemnify, dotond, end hold hermless Lender against any ond all olalms and losses resulting from e
breach of this provision of this Agreement. This oblloatlon to Indemnify and detond shall survive the payinent of tho Irvjabtadnoss end the
satisfaction of this Agreement.
IVInintenance of Casualty Instn-ence. Grantor shall procure snd maintain sll ii%ks insurance. Including without limitation fire, thoft and
ilflbility coverage together with such othor insurance es Lender may require with respoct to the Collateral, in form, amounts, coveregos and
basis reosonnbly acceptable to Lender and Issued by a company or companies ressonebly acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to timo the policies or cenificates ot insurance In form satisfactory to Lender, Including stipulations
that covcrcgoB will not be cancelled or diminished without ot least ten (101 days' prior written notice to Londor and not Including any
disclaimer of the Insurer's llebtlity for foilure to 8've such a notice. Eoch Insurence policy also .shall include an ondorssment providing that
coverage in f ovor of Lender will not be impaired in eny way ,by any act, omission or default of Grontor or ony other parson. In connection
with all policies covering assets in which Lender holds or Is offered o security Interest, Grontor will provide Lender with such loss payable
or other endorsements as Lender may require. If Grantor at any time foils to obtain or mointain nny insurance as rcqulrod under this
Agreement, Lander moy Ibut shell nol be obligated to) obtain such Insurance as Lender deems appropriato, Including If Londor so choosas
d-OMMERCIAL SECURITY A G R E E W I E N Y "
Loan No: 0758647-9001 (Continued) Page 3
"single interest insurance," which will cover only Lender's Interest In the Collateral,
Application of insurance Proceeds. Grantor shell promptly notify Lender of eny loss or damage to tho Collateral if the esiimstsd cost of
repair Or replacement exceeds 500,00, whether or not such casualty or loss Is covered by insuranco. Lender may make prool ot lose If
Grantor fails to do-so within lifteen (15) days of the casuelty. All proceeds of any Insurance on the Collateral, Including eocruod proceeds
thereon, shall be hold by Lender as part ot the Collaterel. If Lender consents to repair or replocement of tho demoged or destroyed
Collsterel, Lender shall, upon salistactory proof ol ex
Preview
DOWNEY BRAND LLP JAMIE P. DREHER (Bar No. 209380) FiLED 2 CONNOR W. OLSON (Bar No. 291493) 621 Capitol Mall, 18th Floor Sacramento 3 Sacramento, CA 95814-4731 Telephone: (916)444-1000 4 Facsimile: (916)444-2100 jdreher@downeybrand.com Deputy 5 colson(@downeybrand.com 6 AttomeysforPlaintiff CALIFORNIA BANK & TRUST 7 8 9 SUPERIOR COURT OF CALIFORNIA 10 COUNTY OF SACRAMENTO 11 UNLIMITED JURISDICTION 12 CALIFORNIA BANK & TRUST, a Califomia CASE NO. corporation, 13 COMPLAINT FOR: Plaintiff, 14 1. CLAIM AND DELIVERY; 15 2. BREACH OF CONTRACT; VSS COUNTERTOPS, INC., a Califomia 16 corporation; DUANE TUCKER, an individual; 3. UNJUST ENRICHMENT; AND MARCIA TUCKER, an individual; and DOES 17 1 through 50, Inclusive, 4. BREACH OF GUARANTY. 18 Defendants. 19 20 Plaintiff Cahfomia Bank & Trust ("CB&T") complains and alleges as follows: 21 PARTIES 22 1. CB&T is, and at all relevant times was, a coiporation organized and existing under 23 the laws of the State of Califomia with its principal place ofbusiness in Califomia. 24 2. CB&T is infomied and believes, and based thereon alleges, that Defendant VSS 25 Countertops, Inc., ("VSS") is, and at all relevant times was, a corporation organized and existing 26 under the laws of the State of Califomia with its principal place ofbusiness in California. 27 3. CB&T is informed and believes, and based thereon alleges, that Defendants Duane 28 1410344.1 J COMPLAINT 1 Tucker and Marcia Tucker (together "Tuckers") (VSS and Tuckers will be referred to as 2 "Defendants") are individuals residing in Califomia. 3 4. The tme names and capacities, whether individual, corporate, associate or 4 otherwise of defendants Does 1 through 50, inclusive, are unknown to CB&T who therefore sues 5 said defendants by such fictitious names. CB&T is infonned and believes and thereon alleges 6 that each of the defendants designated herein as a fictitiously named defendant is, in some 7 manner, responsible for the events and happenings herein referred to, either contractually or 8 tortiously, and caused damage to CB&T as herein alleged. When CB&T ascertains the true 9 names of Does 1 through 50, inclusive, it will seek leave of this Court to amend its complaint by 10 setting forth the same. 11 5. CB&T is infomied and believes, and based thereon alleges, that at all relevant 12 times, except as otherwise alleged, Defendants and DOES 1 -50, and each of them, were acting as 13 the agents, co-partners, servants, employees, directors, and officers of each of the other 14 defendants, and were acting within the full course and scope of their agency, partnership, 15 employment, or other relationship with the full knowledge, consent and permission, either 16 expressed or implied, of the other Defendants in perfomiing the acts alleged herein. Each 17 reference in this Complaint to "Defendant," "Defendants," or a specifically-named Defendant 18 also refers to all Defendants sued under fictitious names. 19 VENUE AND JURISDICTION 20 6. This Court has subject matter jurisdiction over this action, personal jurisdiction 21 over Defendants, and venue is proper based on the fact that the loan agreement, which is the 22 subject of this action, was entered into and was to be perfomied in the County of Sacramento. 23 Moreover, Defendants expressly consented in the loan agreement to jurisdiction and venue in the 24 County of Sacramento. 25 GENERAL ALLEGATIONS 26 7. In consideration for a loan in the original principal amount of $815,000.00 from 27 CB&T (the "Loan"), VSS made, executed, and delivered to CB&T a promissory note (the 28 "Note") on January 26, 2011. Pursuant to the Note, and based on an initial interest rate of 6.00% 1410344.1 2 COMPLAINT 1 (the prime rate) plus 2.75%, VSS was obligated to make principal and interest payments of 2 $9,048.98 every month. Pursuant to the Note, the interest rate is adjusted each year, and is equal 3 to the then prime rate plus 2.15%. Also pursuant to the Note, payments which are more than 15 4 days late subject VSS to a late fee of up to 5.00% of the unpaid portion of the regularly scheduled 5 payment. The Tuckers are guarantors on the Note. A true and conect copy the Note is attached 6 hereto as Exhibit A and is incorporated herein fully by this reference. 7 8. Also on or about January 26, 2011, Defendants Duane Tucker and Marcia Tucker, 8 for valuable consideration, each made, executed, and delivered to CB&T separate unconditional 9 guarantees (together the "Unconditional Guarantees") whereby the Tuckers, each personally and 10 unconditionally guaranteed payment to CB&T of all amounts owing under the Note. Pursuant to 11 the ternis of the Unconditional Guarantees, the Tuckers are required to pay all amounts due under 12 the Note when CB&T makes written demand, and CB&T is not required to seek payment from 13 any other sources before demanding payment. True and con-ect copies of the Unconditional 14 Guarantees are attached hereto as Exhibit B and are incorporated herein fully by this reference. 15 9. Also on or about January 26, 2011, VSS, for valuable consideration, made, 16 executed, and delivered to CB&T a Commercial Security Agreement (the "Security Agreement") 17 to fiarther secure payment of the Note. Pursuant to the Security Agreement, VSS granted to 18 CB&T a security interest in the "Collateral" as that terni is defined therein. A tme and correct 19 copy of the Security Agreement is attached hereto as Exhibit C and is incorporated herein fully 20 by this reference. 21 10. The Note and Security Agreement and any modifications or ainendments provide 22 that should a default in payment occur in the payment of any installment when due under the said 23 documents, CB&T, without any notice and/or opportunity to cure by VSS, is immediately entitled 24 to declare the entire unpaid balance under the Note and all accrued unpaid interest immediately 25 due. 26 11. On or about Febmary 4, 2011, CB&T perfected its security interest in the 27 Collateral by preparing and filing a UCC Financing Statement ("Fonn UCC-l") with the 28 Califomia Secretary of State. A tme and correct copy of the Fonn UCC-l is attached hereto as 1410344,1 COMPLAINT 1 Exhibit D and is incorporated folly herein by reference. 2 12. On or about April 24, 2015, CB&T filed a UCC Financing Statement Amendment 3 ("Amendment to Form UCC-l") whereby CB&T deleted certain Collateral. A true and correct 4 copy of the Amendment to Form UCC-l is attached hereto as Exhibit E and is incorporated 5 herein fully by this reference. 6 13. On or about March 2, 2015, VSS, for valuable consideration, made, executed, and 7 delivered to CB&T a Change in Terms Agreement (the Change in Terms Agreement, togetlier 8 with the Note, Security Agreement and any modifications or amendments thereto are collectively 9 referred to herein as the "Loan Documents") whereby the original tenn under the of the Loan, 10 reflecting the principal amount of $815,000.00, was changed to the principal sum of $465,390.40. 11 Pursuant to the Change in Terms Agreement, VSS' monthly payments, firom April 4, 2014 12 through Febmary 4, 2015, were deferred until maturity; all other monthly principal and interest 13 payments resumed March 4, 2015. A tme and correct copy of the Change in Tenns Agreement is 14 attached here as Exhibit F and is incorporated herein fiilly by this reference. 15 14. In connection with the Change in Tenns Agreement, the Tuckers, for valuable 16 consideration, made, executed, and delivered to CB&T a Reaffinnation of Guaranty Obligations 17 (each reference in this Complaint to "Unconditional Guarantees" also refers to the Reaffirmation 18 of Guaranty Obligations), whereby the Tuckers reaffirmed their obligations as guarantors. A true 19 and correct copy of the Reaffirmation of Guaranty Obligations is attached hereto as Exhibit G 20 and is incorporated herein fiilly by this reference. 21 Defendants' Defaults Under the Loan Documents and the Unconditional Guarantees 22 15. Pursuant to the Loan Documents, Defendants became obligated to pay the 23 principal sum of $465,390.40 together with interest on the unpaid principal balance fi-om January 24 26, 2011, until paid in foil. 25 16. On April 4, 2015, VSS failed and refused to make a scheduled payment of 26 $8,146.74, and the required monthly payments and their applicable late fees in subsequent 27 months, up to and including present, which amounts to $24,440.22. VSS is thus in default under 28 the terms of the Loan Documents. By reason of these defaults, CB&T has elected to declare the 1410.344.1 COMPLAINT 1 whole sum of principal and interest due under the Note immediately due and payable. The whole 2 sum due consists of a principal balance of $417,390.40 plus interest accruing at 6.00% percent 3 per annum, amounting to $644.40, for a combined total of $418,034.80 through June 4, 2015, 4 plus fees and expenses, which continue to accme. Interest and fees will continue to accme for 5 each additional dayfi-omthe date of filing to the date of entry of judgment. 6 17. The Tuckers have refosed to perfonn under the Unconditional Guarantees when 7 CB&T demanded that it pay the sums due by VSS under the Note. 8 18. Pursuant to the Loan Documents with respect to VSS and the Unconditional 9 Guarantees with respect to the Tuckers, Defendants are jointly and severally liable for the Loan 10 and actual and reasonable costs of collection, which include attorneys' fees and costs. 11 FIRST CAUSE OF ACTION 12 Claim and Delivery 13 (As Against VSS) 14 19. CB&T incorporates by reference the allegafions contained in paragraphs 1 through 15 18, as though folly contained herein. 16 20. CB&T has not yet repossessed the Collateral, nor is this Complaint based on any 17 claimed deficiency balance. 18 21. CB&T is infonned and believes and thereon alleges that the Collateial is now in 19 the possession of VSS. Before commencement of this action, on or about June 2, 2015, CB&T 20 demanded that VSS deliver possession of the Collateral to CB&T, but VSS refused to do so, and 21 still unjustly detains the Collateralfi-omCB&T. 22 22. By the tenns of the Loan Documents and the applicable provisions of the 23 Commercial Code, under which VSS pledged the Collateral, CB&T is entitled to immediate 24 possession of the CoUatei-al, as well as other applicable relief set forth in the Loan Documents 25 and/or the Commercial Code. 26 SECOND CAUSE OF ACTION 27 Breach of Loan Documents 28 (As Against VSS) 1410344,1 5 COMPLAINT 1 23. CB&T incorporates by reference the allegations contained in paragraphs 1 through 2 22, as though fully contained herein. 3 24. CB&T perfonned all acts required of it under the Loan Documents, except for 4 those excused by VSS' failure to perfonn. 5 25. .VSS breached the Loan Documents by failing to pay CB&T the amounts due and 6 owing under the Loan Documents without cause and in violation of the ternis of the Loan 7 Documents. Further, CB&T is infonned and believes, and based thereon alleges, that VSS has 8 violated other tenns of the Loan Documents in addifion to those specifically identified herein. 9 26. As a direct and proximate result of VSS' breaches of the Loan Documents, CB&T 10 has suffered damages in an amount not less than $417,390.40 in principal, $644.40 in interest, 11 through June 4, 2015, plus fees, costs and reasonable attorney's fees, which continue to accrue. 12 27. Under the tenns of the Loan Documents, VSS agreed to pay all of CB&T's costs 13 and expenses, including attorneys' fees, if any action was commenced to enforce the Loan 14 Documents. 15 28. By reason of the above-menfioned defaults by VSS, it has become necessary for 16 CB&T to employ Downey Brand LLP, attomeys duly licensed to practice in all the courts of 17 Califomia, to commence and prosecute this action. 18 THIRD CAUSE OF ACTION 19 Unjust Enrichment 20 (As Against VSS) 21 29. CB&T incorporates by reference the allegations contained in paragraphs 1 through 22 28, as though fully contained herein. 23 30. VSS has been enriched by thefondsreceived in exchange for the Loan 24 Documents. 25 31. VSS used thefondsreceived in exchange for the Loan Documents, but has failed 26 to folfill its obligations under those agreements. As a result, VSS' use of those funds has been 27 and continue to be unjust. 28 32. If VSS is allowed to retain thefondstaken, it will have been unjustly enriched at 1410344,1 6 COMPLAINT 1 CB&T's expense. 2 FOURTH CAUSE OF ACTION 3 Breach of Guaranty 4 (As Against the Tuckers) 5 33. Plaintiff incorporates by reference the allegations contained in paragraphs 1 6 through 32 inclusive as though folly contained therein. 7 34. On or about January 26, 2011, the Tuckers for valuable consideration, made, 8 executed and delivered to CB&T the Unconditional Guarantees. Pursuant to the Unconditional 9 Guarantees, the Tuckers agreed to absolutely and unconditionally guarantee the full and puncfoal 10 payment and satisfaction of the indebtedness owed by VSS to CB&T under the Note. Pursuant 11 to the Unconditional Guarantees, the Tuckersfortheragreed to absolutely and unconditionally 12 guarantee the perfonnance and discharge of all VSS' obligations under the Note and related loan 13 documents. 14 35. The Tuckers refused to perfonn under the Unconditional Guarantees when CB&T 15 demanded that it pay the sums due by VSS under the Note. 16 36. CB&T has duly performed all the conditions precedent on its pait to be perfonned 17 under the Loan Documents and the Unconditional Guarantees. 18 37. CB&T has been damaged as a result of the Tuckers breach of the Unconditional 19 Guarantees. Specifically, as of the date of this filing, the amount due, owing and payable under 20 the Unconditional Guarantees is $417,390.40 in principal, $644.40 in interest, through June 4, 21 2015, plus fees, costs, and reasonable attomey's fees, which continue to accrue. 22 38. The Unconditional Guarantees provides that in the event of a default thereunder, 23 the Tuckers are required to pay all attorney's fees incurred by CB&T in collecting any amounts 24 due. 25 39. By reason of the above-mentioned defaults by the Tuckers, it has become 26 necessary for CB&T to employ Downey Brand LLP, attomeys duly licensed to practice in all the 27 courts of Califomia, to coniiiience and prosecute this action. 28 PRAYER FOR R E L I E F 1410344,1 7 COMPLAINT 1 Wherefore, CB&T prays for judgment as follows: 2 AS TO THE FIRST CAUSE OF ACTION 3 1. For the retum of the Collateral; 4 2. For Judgment that the Security Agreement be foreclosed; for judgment for 5 possession of the Collateral by CB&T and/or sale or liquidation of the Collateral in accordance • 6 with the Califomia Commercial Code, and that the proceeds of the sale by applied to the payment 7 of the amounts due to CB&T and any other party to this acfion maybe become a purchaser at the 8 foreclosure sale, whether by auction or private sale. 9 3. That VSS is liable for payment of the obligations evidenced by the Loan 10 Documents, and that a deficiency judgment against it may be ordered following proceedings 11 prescribed by law. 12 4. Against VSS for attorney's fees and costs pursuant to the Loan Documents in the 13 amount the court adjudges reasonable. 14 AS TO THE SECOND CAUSE OF ACTION 15 1. Against VSS for the total sum of $417,390.40 in principal, plus $644.40 in interest 16 through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and interest at the 17 Note rate or the maximum legal rate, whichever is greater, fi'om the date said sums became due 18 and owing to the date of entry of judgment. 19 2. For addifional damages according to proof at trial. 20 3. Against VSS for attomey's fees and costs pursuant to the Loan Documents in the 21 amount the court adjudges reasonable. 22 AS TO THE THIRD CAUSE OF ACTION 23 1. Against VSS for the total sum of $417,390.40 in principal, plus $644.40 in interest 24 through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and interest at the 25 Note rate or the maximum legal rate, whichever is greater,fi-omthe date said sums became due 26 and owing to the date of entry of judgment. 27 2. For additional damages according to proof at trial. 28 3. Against VSS for attomey's fees and costs pursuant to the Loan Documents in the 1410.344,1 8 COMPLAINT amount the court adjudges reasonable. 2 AS TO THE FOURTH CAUSE OF ACTION 3 1. Against the Tuckers for the total sum of $417,390.40 in principal, plus $644.40 in 4 interest through June 4, 2015, for a combined total of $418,034.80, plus fees expenses, and 5 interest at the Note rate or the maximum legal rate, whichever is greater,fi-omthe date said sums 6 became due and owing to the date of entry of judgment. 7 2. For additional damages according to proof at trial. 8 3. Against the Tuckers for attomey's fees and costs pursuant to the Uncondifional 9 Guarantees in the amount the court adjudges reasonable. 10 11 DATED: June! J, 2015 DOWNEY BRAND LLP 12 13 By: '5 U Attorneys for Plainfiff CALIFORNIA BANK & TRUST 16 17 18 19 20 21 22 23 24 25 26 27 28 1410344,1 COMPLAINT EXHIBIT "A" U.S. Small Business Administration U.S. $mcl( ciuumnD MfiinHtratici* NOTE S8A Loan # PLP44<>I03S0-0l SBA Loan Name VSS Indujtrics Date January 26, 20)1 Loan Amount' $ 815,000.00 Interest Rate Wall Street Juui-nsl Prime Rate plus 2.75% Borrower VSS Countertops, Inc, Operating Company NVA Lender Califomia Rank & Trust I, PROMISE TO PAY; In reiuTii for the Loan, Borrower promises to pay to the order of Lender the amount of Eight Hundred Fifteen Thousand and oo/.|oo**«»»"-'«»»«'*"-*"«'n.»»,.,,»>... Dollars, interest on the unpaid principal balance, and all other amounts required by this Nofe. 2, DEFINITIONS: "Collaicrnl" means sny property taken as security for paymait of this Klote or any guarantee of this Note. "Guarantor" means each person who signs a guarantee of payment of this Noie. "Loan" means the loan evidenced by this Note, "Loan Documents" means the docuinents related to this loan signed by BoiTOWtr, any Guarantor, or anyone wlio pledges collateral. "SBA" means ihe Small Bu.sine«s Administration, an Agency of the United States of Ainorica. SUA I'niri 147 (05/03/02) VcrslDii 4,1 Pngc 1/C TKi torm viiRt littdftMiciMly prociLjcctl by CblfuDU JiaA 4 Tri«i 3. PAYMENT TERMS; Borrower must make all payments at the place Lender designates. The payment terms for this Note are: The Interest rate on this Note vM fluctuate. The Initial Interest rale Is 6.00% per year. This Initial rats Is the prime rale In effect on thofirstbushess day of the montn in which SBA lecelvod the loan application, plus 2.75%. The initial Interest rats most remain In efteci until the first change period t>egins. Borrower must pay principal and inleresl payments of $9,046,98 every month, l>eginnlng one month from Ihe month of initial disbursement on this Mole; payments must be made on the same day as ftus date of Inllial dlsbursen:ient on this Notti In the months they are due. Lender will sppi/ each Installment payment first to pay interest accrued to the day Lender receives the payment, than to bring principal current, then to pay any late fees, and wlll apply any remaining balance to reduce principal: The Interest rata will be sdiusted every calender quarter (the 'change period"). The "Prime Rale" Is the prime rate In elTecl on the tlrsl business day of the month (ss published In the Wall Street Journal) In which SBA received Ihe eppllcatton. or any intorest rate change occurs. Base Rales will be rounded to two doclmal places with .004 being rounded down and .005 being rounded up. The adjusted interest rate wHl be 2,75% above the Prime f^ate. Lender will adjust the Interest rate on the first calendar day of each change period. The change in Interest rata is effective on that day VKhether or not Lender gives Sorrower notice of the change. Lender must adjust the payment amount at jeasl annually as needed lo amortize principal over the re/naining term of the note. If SBA purchases the guaranteed portion of (he unpaid principal balance, the interest rata becomes fixed at the rate in efrect at the time of the earliest unoired payment defeult, if there is no uncured payment default, the rale becomesfixedat the rate in effect at the time of purchase. Loan Prepayment: t>Jotwilhslanding any provision fn (tiis Note to fhe contrary: Borrower may prepay this Note. Borrower may prepay 20% or less of the unpaid prfncipsl balance al any time without notice. If Borrower prepays more than 20% ond the Loan has been Bold on the secondary market. Borrower must; a. Give Lender wrillon notice; b. Pay all accrued interest; end c. If the prepayment Is received less than 21 days from the date Lender receives the notice, pay an amounl equal to 21 days' Interest from lr\e date lender receives the nolice, less any Intensat accrued during the 21 days and paid under subparagraph b., above. If Borrower does nol prepay within 30 days from the date Lender receives the nolice, Bon-ower must give Lender a new notice, AH remaining principal and accrued interest Is due and payable 10 years from date of Initial disbursement Late Charge: If a payment on this Note Is more than 15 days late, Lender may charge Borrower a lata fee of up to 5.00% of the unpaid portion of the reguJsrIy scheduled payment. SUA Fonn 147 (06/03/02) Version 4.1 PoBC Tns fam\ via d;ige Vi Tni5formwos electronically p/oducod liy Cfljuomio Banv & Tmsi 10, STATE-SPECIFIC PROVISIONS: Guarantor waives its rights of subrogation, reimbursement, Indemnification, aiid contribution and any other rights and defonses that are or may become available to the guarantor by reason of California Civil Code SecUons 2787 to 2855, inclusive, The guarantor waives all rights and defenses that the guarantor may have because the debtor's debt is secured by real property. This means, among other things: (1) The creditor may collect from the guarantor without/irst foreclosing on any real or personal property collateral pledged by the debtor. (2) If the creditor forecloses on any t^al property collateral pledged by the debtor: (A) The amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if tho collateral Is worth more than the sale price. (B) The creditor may collect from the guarantor even If the creditor, hy foreclosing on the real pixiporty collateral, has destroyed any right tho guarantor may have to collect from the debtor. This Is an unconditional and irrevocable waiver of any rights and defenses the gui>rentor may have because the debtor's debt Is secured by real property. These rights and defenses includb, but are not limited to, any rights or defenses based upon Section SSOa, 580b, 580d, or 726 of the Code of Civil Procedure. The guarantor waivoa all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedleSj such as a nonjudicial foreclosiire with respect to seciirity for a guaranteed obligation, has destroyed tho guarantor's rights of subrogation and reimbursement against the principal by the operation of Section S80d of the Code of Civil Procedure or otherwise. .SBA l"otin I4S ( K V I S ) PrcWous I'tlitioiiv olvnilclt-. P-,1KC 4/5 Tills roitn vfon 4le;tro'nlc3llY prddtiCtid by CaDrurfg? Banit & Tmnl 11. GUARANTOR ACKNOWLEDGMENT OF TERMS. Guarantor ackr.owledges that Guarantor has read'and understands the .significance of all terms of the Note and this Guarantee, including all waivers. 12, GUARANTOR NAME(S) AND SIGNATURE(S): By signing Below, each individual or entity becomes obligated as Guarantor under this Guarantee. SUA l-orm 148 (10/98) Prcviiius alitions olwolcli:. Pugt S/S nils rorm ttearorticAlly pfoduced by Ca;,torf)iH nonb A Trtiai U.S. vSmall Business Administfation UNCONDITIONAL GUARANTEE SBA Loan it PLC 446J(13S0-01 SBA Loan Name VSS Industries Guarantor Dunne L. Tucker Borrower VSS Countertops, Inc. Lender California Bank & Trust •ate •lanuary 16, 2011 Note Amount $ 815,000.00 I. G U A R A N T E E : Guarantor unconditionally guarantees payment to Lender o f all amounts owing under the Note, H i i s Guarantee remains in effect until the Note is paid in dill. Guatnnlor must pay all amounts due undOr tho Noie when Lender makes written demand upon Guarantor. Lender is not required lo seek payment from any other source before demanding payment from Cunrantor. 2. NOTE: Tlie "Note" is the promissory note dated January 26, 2011 In the principal amount of ****^„1i/,*tr»li^»*tr1Hr*.A'j,tHr*, DOllat^ Eight Hundred Fifteen Thousand and 00/100* from BoiTOwer to Lender. It includes uny assumption, renewal, sub-ttitution, or replacement of the Note, and multiple notes under a line of credit. 2 DEFINITIONS; "Collateral" means any property taken as security' for payment of this Note or any guarantee of thi's Note. "Loan" means the loan evidenced by this Note. "Loan Documents" means the doc.ument,W•";:*^^•K •.w^-Vv-.v- References In the boxes above ere tor Lender's use only and do not limit tha applicability of tills document to any pnriicular loen oi Item, Any Item above comalnlnc has been omitted dus to text lenQth limitations. Grantor: V S S Countertops . Inc. Lender: CalKomla Bank & T r u s t 7 6 4 0 Wilbur Way C o m m u n i t y Oevfltopment Business Croup S a c m m e n t o , CA 9 5 8 2 6 2 3 9 9 G a t o w a y Oaks Dr(v« Sulto 1 1 0 Sacramento, CA 9 5 8 3 3 THIS COMIVIERCIAL SECURITY AGREBVIENT dated January 2 6 , 2 0 1 1 , is made a n d oxecutsd b e t w e e n V S S C o u n t e r t o p s , Inc, ("Gronror") nnd Callfomln Bonk a Trust ( " L o n d o r " ) , GRANT OF SECURITY INTEREST, f o t valuable concideratlon, Qrantor grems t o Lender a security I m e f e s t In the Collateral to secure the Indebtedness and agrees t h a t Lender shall have ths rights s t a t e d In this Agreement w i t h respect to the Collateral, In addition to all other rights w h i c ^ Lender m a y hevo bv l a w . COLLATERAL OESCRIPTIOfJ. Tha virord "Collateral" es used in this Agrooment menns Ihe tollowing daBcribaO p r o p e r l v , vvhether now o w n e d or twroofior acquired, w h e t h e r nov^ existing or hereafter erising, and wherever located. In w h i c h Grantor Is giving to Lender a security interest tor the payment o( tho Indebtedness ond performance of all other obligations under the N o w and this A g r e e m e n t ; All equipment and general Intangibles (Including but not l i m i t e d to all s o f t w a r e and ell payment Intangibles); all fixtures; all attachments, accessions, accBssorlse, f i t t i n g s , increases, tools, parts, repairs, supplies, end comrtilnglod goods relating to the foregoing property, nnd nil additions, replacements of ond substitutioru for all or any p a r t of the l o r e g o l n g property: all I n s u m n c e refunds relating to tho torogoing p r o p e n y ; all g o o d w i l l relating to tlie foregoing property; ell records a n d data o n d embedded s o f t w a r e relating t o the forugolng property, and all equipment, i n v e n t o r y and s o f t w a r e to utilize,, create, maintain end process any such r e c o i d t and d a t a on electronic media; and all supporting obligBtions relating to the foregotng property; all w h e t h e r now existing or hereafter arising, w h e t h e r n o w o w n e d ot heronftei acquired or w h e t h e r n o w or hereafter subjeot t o any rights in the foregoing property: and all p r o d u c t s and proceeds llncluiUng b u t not limited to all Insurarice p s y m e n t a l of or relating to the f o r e g o i n g property. 1) . Seico EB 1 0 0 Ponel S a w 2) . One (1) N o w Blesse SeIco UUVT 6 0 0 Rear Loading S a w 3) . One 12xG 50PSI Side Loading Motorized Air Pod Press and one 12x5 Loading Fixed Air Pod Press w i t h serial numbers 3 3 9 6 0 S and 3 3 9 6 B B 41. A k r o n 8 B 5 Edgebander w i t h serial number 8 6 7 8 6 1 , 1 lone) Kir Corner Rounding M o t o r s . 10;^ rnm Cotter i-leadsTogother w t t h all s u b s t i t u t i o n s a n d replacements 51. Bittsse Rover C 9 . 8 5 FT, together w i t h all e t t a c h m e n t s , tooling accecsotlee, appurtenences and a d d l d o n s thereto o 6 ) , Dantherm O u s t Collection System- equipped w i t h Heavy Duty Bsghouse. NRS-10 Alr-iook w i t h 4 ' Drop C h u t e , S 6 6 - 5 0 0 w i t h BO HP Motor, Variobte Froquor\cy Driue, 2 HP Regeneration Fan, PLC Comrol Panel, 8 ' Clearance S u p p o r t S t r u c t u r e , and all standard and additional parts, a t t a c h m e n t s and acoessorles 7 ) . Norfab Q u l c k - R t Laser Welded Beam Pipe- equipped w i t h ell standard end any addttioniil parte, a t t a c h t n e n t t and accessoiies 8) . Hyster S 8 0 X M B C S ' 0 5 ForklHt - serial #FOO4V03O70C 9 ) , Hyster S 8 0 X M ' 0 * Forklift - serial # F 0 0 4 V O t 9 0 3 B 101. One (1) A u t o q u i p Soissars Lift - Model feOSSO-EXWSP, One | 1 ) A u t o q u i p Scissors U f t - M o d o l J ! ^ 4 8 S 6 0 , One (1) Autoqulp Scissors Lift - Model #4OO0LB Capacity, w t t h all standard and any additional parts, attaohmonts and accossorlas 11), One (11 Mow Black Grothars 1 0 ' X 4 ' Press and One (1) N e w Contfol Zone Option 4 ' X 8 ' In addition, the w o r d "Cotleteral" also Includes all the t o l l o w i n g , w h e t h e r now o w n e d or heieattcr acquired, w h e t h e r n o w existing or heropfter eriaing, and w h e r e v e r l o c a t e d : (Al All accessions, a t t a c h m e n t s , accessories, tools, parts, supplies, raplncemente of and additions to any o f the collateral described herein, w h e t h e i added n o w or later, IB) -All products and produce o f any of tho property described In this Collateral section. (Cl All accounts, general intangibles, instrumente, rente, m o n i e s , paymBnta, and-all other rtghis, arising o u t o< a oelo, l«Bse, conslgnmerit or other disposition of a n y o t tho property described In this Collateral section, (01 All proceeds (including insurance proceeds) trom the sole, destruction, l o s s , or other diaposltlon of any.of the propertv described In this Collateral s e c t i o n , and s u m s dus i r o m a third party \ut\o has damaged or destroyed the Collotsrol or f r o m t h a t p a n y ' s insurer, whethor due t o judgment, s e t t l e m e n t or other process. (E) All records and data relating to any of the property described In this Collateral section, w h e t h e r In the f o r m ot a w i l t i n g , photograph, m i c r o f i l m , m l c r o t l c h e , o r eieclronic media, togothsr w i t h all ot Grantor's right, title, and Interest In and to all c o m p u t s r software mquired to utilize, create, m a i n t a i n , and process sny such records or data on electronic m e d i a . GRANTOR'S REPRESENTATIONS A N D WAnRAI^JTIES W I T H RESPECT T O THE C O L L A T E R A L W i t h respect to the Collateral, Grantor ropiesBntn and promise.*) to Lender t h a t : Perfection o f Security Interest. Grantor agrees to take w h a t e v e r actions ere roquostcd by Lender to p e r f e c t snd continue Lender's security Intereet In tho CollaierBl. Upon request of Lender, Grentor w i l l deliver (o Lender any and ell of the d o c u m e n t s evidencing or constituting tho Collateral, and Grantor will note Lender's Inteieat upon any and all chette! paper end Instruments if not delivered to Londor lor possosuion by Lender. Notices to Lender. G r s n t u r w i l l p r o m p t l y notify Lender In w r i t i n g et Lender's eddress s h o w n above (or s u c h oriter addresses ss Lender msy designate i r o m time to time) prior to any ("I chengo In Grantor's name; 12) change in Grantor's a s s u m e d business narnels); 13) change in the manegoment o f tho Corporation Grantor; (4) change In the eutboriied .lignerlsl; (51 change in G r a n t o r ' s principal office address; (61 change In G r a n t o r ' s state ot organization: (7) conversion of Grantor to a new or different type of business entity; or (8) chsnge In any otlier aspect o f Grantor that directiy or IndlrecHy relates to' any agieements b e t w e e n Oramor and Lender. No change In Grantor's name dcr^MERCIAL SECURITY AGREEMEIMV"'' Loan No: 0758647-9001 (Continued) Pago 2 or state of organization will take effect until after Lender has recolved notice. No Violation. The execution and delivery ot this Agreement will not vloleie any lew or agreement govorning Grantor or to which Grentor is a party, and Its cerdficatc or articles of incorporution and bylaws do not prohibit any term or condition of this Agreement. Enforcaabllitv of CollatBral, To me extenv-the Collateral consists of scfiounts, chattel paper, or gerveral Intnnglbies, es defined by iho Uniform Cornmerclel Code, the Collateral is enforceable In accordance with Its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of proparotlon. and execution, ond sll persons appearing to be obllgsind on the Collateral have authority and cepectty to ccnrrsct snd ere In fact obligated es they appear to be on the Collateral. There shell be no aetofts or Doumerclalms against any ol tho Collateral, and no ogroom«ni shall have been made under v^hich any deductions or discounts may bo claimed concerning the Collateral except IhoEii disclosed to Lender In'writing. Location of the Collateral. Except in tho ordinary course of Grentor'3 business, Grentor agrees to keep the Colleteral (or to tho extent tho Collateral consists of intangible property such as accounts ur general intangibles, the.records concerning the CollatsrnI) et Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request. Grantor will dcllvor to Lender In form satisfactory lo Lender a schedule.of reel properties and Collateral locations relating to Grentor's operations, including without limitation tho following: ( I I all reel property Grentor owns or Is purchasing; (2) ell reel propeny Grantor Is renting or leasing; (31 ell sloisge faollltiec Grantoi owns, rents, teases, or uses; snd 141 all other properties where Collateral Is or may be located. Removal of the Collateral. Except In the ordinary couiee ol Grantor's business. Grantor shall not remove the Collaterol from its existing location withoul Lender's prior written consent. To the oxtont that the Collateral consists of vehicles, or other titled propertv, Grnntot shall not toko or permit eny action which would require appilcBtlon for certificates o l title for the vehicles outside the State ot Calilornla, without Lender's prior written consent. Grantor shall, whenever requested, advise Lender of tho exact Incotion of the Collotorel. Transactions Involving Collateral, Except for inventory sold or accounts collected in the ordlnery couise of Grantor's business, or as othorwiSH provided for in this Agreement, Grentor shall not sell, olier TO sell, or otherwine transfer or dispose ol tho Colleteral, Grentor shall not pledge, mortgoge, cnnumbor or otherwise. permit the Colleteral to be eubjoct to any lien, security interest, encumbience. or charge, ottier than the security intorest provided lor in this AgreBmeiit, withoul the piior written consent of Lender. This Includes security interests oven if junior In right to the security interests granted under this Agreement. Unlaas waived bv Lender, all proceeds from any disposition ot the Colleteral (tor whatever roaaon) shall be held In trust for Lender and shall not bo commingled with any othei funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition, Upon receipt. Grantor shell immediately deliver any such proceeds to Lender. TKle, Grantor represents and warrants to Lender that Grantor holds good and meritetable title to the CQllstorsI, free and clear of oil lianc and encumbrances except tot the lien of this Agreement. No financing statement r.ovorlng any of the CollaterBl Is on file in any public offlco other than those which reflect the security interest created by this Agreement or to which Lender has epeciftcelly consented. Grentor shall defend Lender's rights In the Colleteral egeinst the claims and demands of all other persons! Repairs end tviaintenanco. Grentor agrees to keep and maintain, and to cause othors-to keep ,ond molnrain, tt-ie Colleteral In good order, repair and condition at all times while this Agreement remains in effect. Grantor lurther agrees to pay when due all clelms lor work done on, or services rendered or msterlsl lurnlshed in connection with tha Collateral so that no lion or oncumbranoe may over attach tu ot bo filed against the Colleteral, Inspection o'f CoOotoral. LerKlor and Lender's deBlgnated represontatlvRs end agents ohall have the right et ell reosoneble rimes lo examine and inspect the Collaterel wherever located. Taxes, Assessments and Liens. Grantor will pay when due ell taxes, sseeesmonts and liens upon tho Colleteral, its uso or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any ol the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien If Grantor is In good felth conducting an Rppraprlote proooeding to contest - the obligation to pay and so \ong as Lender's Imorest in the Collnteral is not jeoperdlted In Lender's cole opinion. If the Collatorel Is Bubjected to a lien which Is not discharged within fifteen (15) days, Grantor shell deposit with Lender cash, e sufiiclent corporate surety bond or other eecurlty satisfactory to Lender in an amount edequate to provide for the discharge of the lien plus an^ Interest, costs, attorneys' fees or other charges that could accrue as a result ot (oreclosuro or sale o4 tho Collateral. In any contest Grantor shall defend Itself snd Lender and shall satisfy any (Inal adverse Judgment before enforcement against the Collateral. Grantor shall noma Lender as en additional obligee under any surety bond furnished In the contest proceedings. Grantor further agrees to turnlsh Lender with evidence thai such taxes, essessmente, and goverrwnemsi and other charges have been-paid In lull and In e timolv manner, Qremoi may whhhold eny 4uch payment or may elect to contest any lien if Grantor is In good faith conducting an apptoprlale proceeding to contest the obligation to pay end so long as Lender's Intereet in the Collateral Is not jeopardized. Compilonce whh Governmental Requirements. Grantor shall comply prompliy with all laws, ordinances, rules and regulations ol ell governmental authorities, now or herecher in effect, epplicebie to the ownership, production, disposition, or use of the Colioterel, Including all laws or regulations relating to the undue erosion of highly-erodlble lend or reletlng to. ttie conversion of ,wetlBnd3 tor tho production ol an sgrlculiural product or commodity. Grantor may contest in good faith any such law, ordlnsnco or legulation nrul withhold oompliohce during any proceeding. Including appropriate appeals, so long es Lender's Interest In the Collateral, In Lender's opinion. Is nor jeopardized. Hazardous Subsrancos. Grantor represents end warrants thet the Collsterel never has bean, and never will be so long as this Agroemoni remains a lian on tlie Collaterol, used In'violation ot any Environmental Lews or for tha generation, monufecture, storoge, iransportotion, treatment, disposal, release or dirsatoned release of any Hazardous Subetancc. The roprosentedons and warranties contained herein ere based on Grentor's due diligence in investigating Ihe Collateral for Hazardous Substencas, Grantor hereby (1) releases and waives any future oloims against Lender for indsmniiy or contribution in the event Grontor becomes liable fqi cleanup or other costs under ony Environmental Laws, end (21 agrsae to Indemnify, dotond, end hold hermless Lender against any ond all olalms and losses resulting from e breach of this provision of this Agreement. This oblloatlon to Indemnify and detond shall survive the payinent of tho Irvjabtadnoss end the satisfaction of this Agreement. IVInintenance of Casualty Instn-ence. Grantor shall procure snd maintain sll ii%ks insurance. Including without limitation fire, thoft and ilflbility coverage together with such othor insurance es Lender may require with respoct to the Collateral, in form, amounts, coveregos and basis reosonnbly acceptable to Lender and Issued by a company or companies ressonebly acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to timo the policies or cenificates ot insurance In form satisfactory to Lender, Including stipulations that covcrcgoB will not be cancelled or diminished without ot least ten (101 days' prior written notice to Londor and not Including any disclaimer of the Insurer's llebtlity for foilure to 8've such a notice. Eoch Insurence policy also .shall include an ondorssment providing that coverage in f ovor of Lender will not be impaired in eny way ,by any act, omission or default of Grontor or ony other parson. In connection with all policies covering assets in which Lender holds or Is offered o security Interest, Grontor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time foils to obtain or mointain nny insurance as rcqulrod under this Agreement, Lander moy Ibut shell nol be obligated to) obtain such Insurance as Lender deems appropriato, Including If Londor so choosas d-OMMERCIAL SECURITY A G R E E W I E N Y " Loan No: 0758647-9001 (Continued) Page 3 "single interest insurance," which will cover only Lender's Interest In the Collateral, Application of insurance Proceeds. Grantor shell promptly notify Lender of eny loss or damage to tho Collateral if the esiimstsd cost of repair Or replacement exceeds 500,00, whether or not such casualty or loss Is covered by insuranco. Lender may make prool ot lose If Grantor fails to do-so within lifteen (15) days of the casuelty. All proceeds of any Insurance on the Collateral, Including eocruod proceeds thereon, shall be hold by Lender as part ot the Collaterel. If Lender consents to repair or replocement of tho demoged or destroyed Collsterel, Lender shall, upon salistactory proof ol ex