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Exhibit 10.11
[BANK OF AMERICA LETTERHEAD]
October 1, 1999
Xx. Xxxxxx Xxxx
Chief Financial Officer
Bitwise Designs, Inc.
Building 00
Xxxxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Dear Xx. Xxxx:
Bitwise Designs, Inc. ("Company") is party to an Amended and Restated Loan and
Security Agreement ("Agreement"), dated July 19, 1999 with Bank of America (dba
NationsCredit Distribution Finance, Inc.) ("Bank").
The Company is in default of the Agreement due to violations of the financial
covenants contained in the Agreement and for non-payment of amounts due and
payable under the terms of the Agreement. The Bank is willing to forbear from
the exercise of any rights or remedies under the Agreement due to the defaults
provided the Company agrees to the following conditions:
- Provide Bank with a partial payment of $600,000, via wire transfer, no later
than October 4, 1999, such payment to be applied to the outstanding principal
balance of $1,212,451.52.
- Provide Bank with a weekly payment equal to $11,778 plus interest on each
Monday commencing October 11, 1999 with all remaining amounts due and payable
September 30, 2000. Interest is to accrue at the Bank's Prime rate as it
changes from time to time plus 4%. In addition to the above payment the
Company will pay any collateral shortfall shown on the weekly Borrowing Base
Certificate, after making allowance for the normal weekly payment by December
31, 1999, based on ??? advance on current receivables in accordance with the
formulas set forth in the Agreement.
- Pay to the Bank 50% of the proceeds received by the Company from the sale of
equity, including the exercise of warrants and the sale of additional
securities, until the balance of the loan is paid in full; and provided
further, that, in the event Company secures a new credit facility to replace
the loan, Company will pay the balance of the principal and interest of the
loan upon closing of the new credit facility.
- Provide Bank by the 5th day of each month a detailed inventory report,
detailed accounts receivable aging and detailed accounts payable aging as of
the end of the prior month and all other reports and financial statements as
required under Section 10 of the Agreement.
- In the event that the Company ceases to be publicly traded, provide Bank on a
monthly basis within 30 days of month end a consolidated income statement and
balance sheet containing the operating results and balance sheet accounts of
the Company and any subsidiaries or affiliates. These financial statements
are to be prepared in accordance with GAAP using a presentation format
consistent with the format used in the fiscal year and audited financial
statement previously provided to Bank.
- The Company's management will use all best efforts by fully cooperating with
the Bank's field auditors during the collateral Audit to take place on
October 4, 1999 and any subsequent audits Bank
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- deems necessary. Any audit which discovers a material irregularity in the
Company's financial accounting or in the computation of the Borrowing Base
Certificate will cause this forbearance to cease.
- Xx. Xxxx Xxxxx executes the Guaranty attached.
Provided Company agrees to and complies with the matters set forth herein,
Xxxxxxxxx agrees to the matters set forth herein, and no further defaults occur
or exist under the Agreement, Bank will forbear from the exercise of any rights
or remedies under the Agreement at this time. This letter is not a waiver of any
rights or remedies by Bank, and does not establish a precedent or obligate Bank
in its future dealings with Company. By signing below, Company and Guarantor
acknowledge that they have no actual or potential claims or causes of action
against Bank, and hereby waive and release any right to assert same. The
foregoing does not affect in any way the process of (a) adjusting and
reconciling credits, debits, payments and charges under the Agreement or (b)
calculating amounts due and owing from time to time to NationsCredit under the
Agreement.
Please sign below to evidence your agreement to the matters set forth in this
letter. Feel free to contact me with any questions you may have.
Sincerely,
Bank of America, NA
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Senior Vice President
Acknowledged and agreed on 10/1/ , 1999:
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Company:
Bitwise Designs, Inc.
By: /s/ Xxxx Xxxxx
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Title:
Guarantor:
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
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[Bank of America Logo]
GUARANTY
Obligee: Bank of America, N.A. Debtor: Bitwise Designs, Inc.
Address: 0000 Xxxxxxxx Xxxxxxxxx Address: Building 00,
Xxxx: Xxxxxxxxxx Xxxxx: XX Roefordam Industrial Park
Zip: 00000 Xxxx: Xxxxxxxxxxx Xxxxx: XX
Zip: 12306
To induce you to extend credit to the debtor named above ("Debtor"), and in
consideration of the benefits to accrue to each undersigned guarantor
("Guarantor"), Guarantor hereby unconditionally guarantees and promises to pay
to you on demand as indebtedness of Debtor. As used herein, "Indebtedness" means
any and all amounts owing to you from time to time by Debtor, whether principal,
interest, fees, charges, expenses or other amounts. The term "you," as used
herein, shall include you and your subsidiaries and other affiliates.
Demand for payment may be made hereunder at any time that any Indebtedness is
due and unpaid or at any time that Debtor is in default under any conditions or
obligations in any agreement of any kind with you. Guarantor further agrees that
all Indebtedness of Debtor shall, for the purposes hereof, be deemed immediately
due and payable, and shall be forthwith payable by Guarantor, if Debtor or
Guarantor is unable to pay its debts as they mature, makes an assignment for the
benefit of creditors or becomes subject to any proceeding under any state or
federal bankruptcy, reorganization, insolvency, dissolution, liquidation or
debtor relief law, if a receiver, trustee or similar official is appointed or
petitioned for Debtor or Guarantor or any part of their property, or if a
material adverse change occurs in the financial condition, business operations,
assets or prospects of Debtor or Guarantor.
This is a continuing Guaranty covering all present and future Indebtedness of
Debtor to you and shall include Indebtedness revived after being satisfied. This
Guaranty shall apply to all Indebtedness funded or committed on or before your
actual receipt of written notice of revocation as to future transactions, but
revocation by Guarantor shall not affect the continuing liability of Guarantor
with respect to Indebtedness created or committed prior to your receipt of such
notice, nor the liability of any of the undersigned that have not given notice.
If, due to a bankruptcy proceeding, lawsuit or any other circumstances, you ever
return or otherwise disgorge any Indebtedness previously paid, then Guarantor
shall remain obligated to you hereunder for the amount so repaid or recovered to
the same extent as if such amount had never been received by you.
Guarantor agrees that you may, without notice or demand, from time to time
renew, compromise, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any part thereof, take
and hold security for the payment of this Guaranty or the Indebtedness,
exchange, enforce, waive, impair or release any such security, apply such
security and direct the order or manner of sale thereof as you in your
discretion may determine, and release, compound or substitute any one or more
endorsers or guarantors; that you shall not be required to proceed against
Debtor or any other person, proceed against or exhaust any security held for the
Indebtedness, or pursue any other remedy available to you before making demand
hereunder and proceeding against Guarantor; that until payment in full of all
obligations of Debtor to you, Guarantor shall not have any right of subrogation,
contribution, assignment of Indebtedness or reimbursement for payments made by
Guarantor hereunder, nor any right to participate in any security now or
hereafter held by you; that you may offset against any deposit, investment, or
other account or claim of Guarantor with or against you or any of your
affiliates for any obligations due and payable hereunder, that any act by you
that injures or increases the risk of Guarantor or exposes Guarantor to greater
liability shall not discharge any obligations hereunder, and that all
presentments, demands for performance, notices of non-performance, protests,
notices of protest, notices of dishonor and notices of acceptance of this
Guaranty and of the existence or creation of additional Indebtedness are hereby
waived. Guarantor waives all rights and defenses arising out of an election of
remedies, such as nonjudicial foreclosure with respect to security for any
Indebtedness, even though that election of remedies has destroyed Guarantor's
rights of subrogation and reimbursement against Xxxxxx. Guarantor acknowledges
that this Guaranty is necessary to the conduct and promotion of the business of
Guarantor, and can be expected to benefit such business. Guarantor's obligation
hereunder shall not be discharged, impaired or affected by, the power or
authority or lack thereof of Debtor to incur the Indebtedness, the validity or
invalidity of any documents evidencing or securing the Indebtedness, the effect
of any statute of limitations, your failure to disclose any information that may
be available to you regarding any defaults by Debtor or Debtor's ability to
repay the Indebtedness, or any offsets, counterclaims or defenses (other than
payment in full of the Indebtedness) that Guarantor may have to its obligations
hereunder, all of which are hereby waived by Guarantor. Guarantor agrees to pay
reasonable attorneys' fees and other costs and expenses incurred by you in the
enforcement of the Indebtedness or this Guaranty. If any amount owing hereunder
by Guarantor shall not be paid when due, you may offset against any deposit,
investment, or other account or claim of Guarantor with or against you or any of
your affiliates.
This Guaranty shall be governed by and construed in accordance with the laws of
the State of Georgia, without giving effect to conflict of law principles.
Guarantor agrees that courts located in Atlanta, Georgia, including the United
States District Court of the Northern District of Georgia, shall have
jurisdiction to hear and determine any claim or dispute pertaining to this
Guaranty. Guarantor expressly consents to such jurisdiction, waives any claims
of inconvenient forum, waives personal service of any summons, complaint or
other process in any action relating hereto, and agrees that service may be made
by certified mail to Guarantor at the address set forth below (or such other
address as Guarantor shall from time to time specify to you in writing as a
notice address). Nothing herein shall affect your right to serve process in any
other manner as provided by law, or to commence legal proceedings or otherwise
proceed against Guarantor in any other jurisdiction.
This Guaranty shall inure to the benefit of transferees and assignees of any
part or all of the Indebtedness, and shall extend to loans made by such
transferees or assignees. If more than one Guarantor is party hereto, each
agrees that its obligations are joint and several with each other Guarantor, and
you may demand and receive payment from each Guarantor in any order. Any married
individual signing this Xxxxxxxx agrees that recourse may be had against that
individual's separate as well as joint property for obligations hereunder.
TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF ANY FORUM STATE GUARANTOR WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS
GUARANTY OR ANY RELATED MATTERS. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
Witnesses:
Signature: /s/ Xxxx X. Xxxxx (L.S.) Date: 10/1/99
_____________________________ Name: Xxxx X. Xxxxx
_____________________________ Address: 000 Xxxxxx Xxxx, Xxxxxxxxxxx, XX 00000
Signature: (L.S.) Date:
_____________________________ Name:
_____________________________ Address:
