BANK OF AMERICA, N.A.
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of February 29, 2000, by and
between BANK OF AMERICA, N.A., a national banking association ("Bank") and the
Borrower described below:
In consideration of the Loan described below and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, Bank and
Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:
A. Affiliate. As to any Person, each of the Persons that directly or
indirectly, through one or more intermediaries, owns or controls, or is
controlled by or under common control with, such Person or any individual
related to such Person. For the purpose of this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of
voting securities, by contract or otherwise.
B. Borrower. Xxxxxx Technologies, Inc., a Delaware corporation.
C. Borrower's Address: 0000 Xxxxxx Xxxx Xxxxxxxxx Xxxxxxx-Xxxxx, XX
00000
D. Collateral. The property and interests in property securing payment
and performance of the Loan, as set forth in Section 3 hereof.
E. Hazardous Materials. All materials defined as hazardous wastes or
substances under any local, state or federal environmental laws, rules or
regulations, and petroleum, petroleum products, oil and asbestos.
F. Loans. Collectively, the loans, credit facilities and Hedge
Agreements described in Section 2 hereof and any other existing or
subsequent loan or extension of credit by Bank to the Borrower that is
subject to this Agreement.
G. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by Borrower in favor of Bank and all
other documents, instruments, guaranties, certificates and agreements
executed and/or delivered by Borrower, any guarantor or third party in
connection with any Loan.
H. Material Adverse Effect. Any material adverse effect on (i) the
business, assets, operations or financial or other condition of Borrower
and its subsidiaries, (ii) the Borrower's ability to pay the Obligations in
accordance with the terms thereof, or (iii) the Collateral or Bank's
security interest in the Collateral or the priority of such security
interest.
I. Note. the promissory note described in Section 2 hereof.
J. Obligations. The Loans and all other loans, advances, indebtedness,
liabilities, obligations, covenants and duties (including post-petition
interest on the foregoing, to the extent lawful) owing, arising, due or
payable from the Borrower to the Bank of any kind or nature, present or
future, arising under this Agreement or any of the other Loan Documents,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising. The term includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and any other sums
chargeable to the Borrower by the Bank under this Agreement or any of the
other Loan Documents, as well as all obligations of the Borrower pursuant
to any Hedge Agreements.
K. Permitted Liens. Collectively, (i) all liens or security interests
securing indebtedness owed to Bank, (ii) pledges or deposits made in the
ordinary course of business in connection with or to secure workers'
compensation, unemployment insurance, pensions or other employee benefits
accruing under provisions of law or under agreements now in force and
disclosed to Lender, (iii) liens imposed by law, such as carriers',
warehousemen's, materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations that are not overdue, or which are being contested in good
faith and against which, if requested by the Bank, the Borrower will
establish reserves satisfactory to the Bank, (iv) zoning restrictions,
easements, licenses, reservations, covenants, conditions, and restrictions
on the use of property which do not, in the aggregate, materially detract
from the value of Borrower's property or assets or materially impair the
use thereof in the operation of its business; (v) liens for taxes not due
or which are being contested in good faith and against which, if requested
by the Bank, the Borrower will establish reserves satisfactory to the Bank;
and (vi) purchase money security interests granted by the Borrower in the
ordinary course of its business.
L. Person. A corporation, an association, a joint venture, a limited
liability company, a partnership, an organization, a business, an
individual, a trust or a government or political subdivision thereof or any
government agency or any other legal entity.
M. Prime Rate. The prime rate of the Bank, as announced or otherwise
established from time to time. The Prime Rate is a reference rate used for
pricing commercial and consumer loans and is not necessarily the best or
lowest rate to any borrower on any loan from the Bank.
N. Tangible Net Worth. The amount by which Borrower's total assets
exceed total liabilities in accordance with GAAP, minus (i) goodwill, (ii)
contract rights, (iii) leasehold improvements, (iv) assets representing
claims on (A) shareholders, directors, or officers or (B) Affiliates, and
(v) other assets constituting intangible assets, including, without
limitation, any patents, trademarks, tradenames, copyrights or similar
intellectual property.
Accounting Terms. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied. All financial computations made under this
Agreement for the purpose of determining compliance with the financial
requirements of this Agreement shall be made, and all financial information
required under this Agreement shall be prepared, in accordance with GAAP, as in
effect on the date hereof.
2. LOAN. Subject to the terms of this Agreement, Bank hereby agrees to make
a revolving credit facility available to Borrower, as follows:
A. Revolving Line of Credit. (i) Subject to the terms hereof, Bank
agrees to extend a revolving line of credit (the "Revolver") to Borrower,
in the original principal amount of Two Million Dollars ($2,000,000), for
the purpose of providing temporary financing of the Borrower's short-term
working capital needs, prior to the closing of a private placement of
capital stock of the Borrower and receipt of the proceeds thereof (the
"Private Placement"). Provided that no default has occurred hereunder, the
Borrower may obtain advances from time to time under the Revolver, and may
repay and re-borrow under the Revolver, subject to the Borrowing Base
Agreement attached hereto as Exhibit A and by reference made a part hereof.
To evidence the Revolver, Borrower shall execute and deliver to Bank a
promissory note (the "Note") in the principal amount of $2,000,000, which
Note shall bear interest and be payable in accordance with the terms set
forth hereinbelow. The Revolver shall mature and become payable in full on
July 31, 2000, which date shall be the "Maturity Date".
(ii) Fees. (a) The Borrower shall pay a commitment fee to the Bank for
the Revolver in the amount of $40,000, of which $10,000 will be refundable
to the Borrower if the Private Placement is closed and net proceeds
therefrom of not less than $6,500,000 are received on or before June 1,
2000.
(b) The Borrower shall also pay an availability fee for the
Revolver quarterly in arrears, in the amount of one-half percent
(1/2%) of the average unused balance of the Revolver during each
quarter.
(iii) Interest and Principal. Interest on the principal amount
outstanding under the Revolver from time to time shall accrue at a variable
rate of the Prime Rate, plus two hundred basis points (2.00%) per annum,
which accrued interest shall be payable monthly in arrears. The interest
rate payable on the Revolver shall be subject to change The interest rate
shall become the Prime Rate plus 50 basis points (.50%) if the Private
Placement is closed and gross proceeds of not less than $6,500,000 are
received by the Borrower on or before June 1, 2000. The principal of the
Note shall be repaid in full on the Maturity Date, together with all
accrued but unpaid interest.
(iv) Collateral Security. Repayment in full of all Obligations of the
Borrower shall be secured by the Collateral.
(v) Guaranties. Subject to the limitation set forth below, repayment in
full of all Obligations of the Borrower shall be personally, and jointly and
severally, guaranteed by Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx (the
"Guarantors"), pursuant to guaranty agreements in form satisfactory to the Bank
(the "Guaranties"). It is provided, however, that the Guaranties will be
released upon the closing of the Private Placement and receipt by the Borrower
of gross proceeds of not less than $6,500,000 therefrom on or before June 1,
2000. It is further provided that each of the Guarantors shall be required to
maintain minimum liquidity, as determined by the Bank, in an amount of not less
than $500,000 at all times, the calculation of which minimum liquidity shall
exclude all of the Guarantors' ownership interests in the Borrower and all home
equity lines of credit. Notwithstanding the foregoing agreement to guarantee all
of the Obligations of the Borrower, the Guarantors shall not be required to
guarantee payment of any principal amounts outstanding under the Loan, up to or
equal to Three Hundred Thousand Dollars ($300,000), at any time and so long as
the principal amount outstanding under the Loan does not exceed $300,000, and no
default has occurred under this Agreement. If, however, at any time the
principal amount outstanding hereunder does not exceed $300,000 and a default
occurs (as described in Section 8 below), which default is not cured by the
Borrower within thirty (30) days following notice thereof from the Bank, the
Guarantors shall be deemed to be guarantors of all Obligations of the Borrower.
B. Hedge Agreements Borrower shall have the option to fix the interest
rate on all or any portion of the Loan, at any time, through the use of a Hedge
Agreement purchased from the Bank at the market rate for such products. For
purposes hereof, a "Hedge Agreement" means any agreement between Borrower and
Bank, or any affiliate of Bank, now existing or hereafter entered into, which
provides for an interest rate or commodity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross-currency swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Borrower's exposure to fluctuations in
interest rates, currency valuations or commodity prices. Notwithstanding any
other terms of this Agreement, any loan subject to a Hedge Agreement shall be
prepayable only in accordance with, and subject to any fees imposed under, the
terms of such Hedging Agreement.
3. COLLATERAL SECURITY. Payment and performance of the Obligations shall be
secured by the following Collateral, and the Borrower hereby grants, conveys,
transfers and assigns to the Bank a security interest in and lien upon all of
the property described below:
A. A first and prior assignment of, security interest in and lien upon
all of the Borrower's interests in and to all patents for products, goods
and items produced or manufactured by the Borrower, and all processes
employed in the production or manufacture thereof, to the extent the
granting of such security interests shall not constitute a violation of law
or a default under any existing agreement between the Borrower and any
Person with regard to any such patents;
B. A continuing first priority security interest in and lien upon all
of the Borrower's accounts, inventory, and general intangibles, and a first
priority security interest in and lien upon all of the Borrower's
furniture, machinery and equipment, whether now owned or hereafter
acquired, and wherever located, together with all proceeds thereof.
Borrower agrees and undertakes to execute and deliver to the Bank such
deeds of trust, security agreements, pledge agreements, assignments, financing
statements, subordinations, certificates, waivers, estoppel agreements, and
other documentation, in form acceptable to the Bank, as may be reasonably
requested by the Bank in connection with the Collateral. Borrower further agrees
that all of the Collateral shall secure all of the Obligations of the Borrower
to the Bank. It is specifically agreed and acknowledged by the parties hereto
that Borrower has entered into, or will enter into, a joint venture with
Schoeller Textil AG, and that the personal and real property to be owned by such
joint venture shall not be deemed to be Collateral, as herein defined.
4. CONDITIONS PRECEDENT. The Bank's agreement to extend the Loan to the
Borrower is subject to the fulfillment, to the Bank's satisfaction, of all of
the following conditions:
A. Bank shall have received, on or before the date hereof (i) a copy
of the resolutions of the Board of Directors of the Borrower, certified on
such date by an officer of the Borrower, authorizing the execution and
delivery of this Agreement, the borrowings hereunder and the execution and
delivery of the Note and the other Loan Documents and the Collateral, and
(ii) such additional documents and requirements as the Bank or counsel for
the Bank may reasonably request.
B. The Borrower shall have executed and delivered all documentation
for the Loan reasonably requested by the Bank, which shall be in form and
content reasonably acceptable to the Bank and its counsel.
C. The Borrower shall have provided to the Bank, in form satisfactory
to the Bank, all financial and other information concerning its business
and affairs, as reasonably requested by the Bank.
D. The Borrower shall have provided to the Bank, in form and content
satisfactory to the Bank and its counsel, an opinion of its counsel, stating
that (i) the Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the corporate and
legal authority to own its property and carry on its business as now being
conducted; (ii) this Agreement has been duly executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and similar laws and other laws generally affecting
the enforceability of creditors' rights and to general principles of equity; and
(iii) the Loan Documents when duly executed and delivered by the Borrower to the
Bank in accordance with the provisions hereof, will constitute the legal, valid,
and binding obligations of the Borrower, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, reorganization and similar laws and
other laws generally affecting the enforceability of creditors' rights and to
general principles of equity.
E. All terms and conditions of the Bank's commitment letters to the
Borrower for the Loan have been satisfied and fulfilled, to the reasonable
satisfaction of the Bank.
F. To the best knowledge of the Borrower, no event has occurred or
failed to occur that would have a Material Adverse Effect on the financial
condition of the Borrower, as set forth in its December 31, 1998 annual
financial statements, and in its subsequent quarterly financial statements.
G. The Borrower shall have certified that the execution of the Loan
Documents shall not cause any default which would have a Material Adverse
Effect on Borrower under any other contract or agreement to which the
Borrower is subject.
H. The Borrower shall have paid or agreed to make payment of all
reasonable expenses actually incurred in connection with the closing of the
Loan, including, without limitation, insurance premiums, audit charges and
attorneys' fees.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Bank as follows:
A. Good Standing. Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the power and authority to own its property and to carry on its
business in each jurisdiction in which Borrower does business.
B. Authority and Compliance. Borrower has full power and authority to
execute and deliver the Loan Documents and to incur and perform the
obligations provided for therein, all of which have been duly authorized by
all proper and necessary action of the appropriate governing body of
Borrower. No consent or approval of any public authority or other third
party is required as a condition to the validity of any Loan Document, and
Borrower is in compliance with all material laws and regulatory
requirements to which it is subject.
C. Binding Agreement. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legally binding obligations of
Borrower, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and similar laws and other laws
generally affecting the enforceability of creditors' rights and to general
principles of equity.
D. Litigation. There is no material proceeding involving Borrower
pending or, to the knowledge of Borrower, threatened before any court or
governmental authority, agency or arbitration authority, except as
disclosed in Schedule A attached hereto.
E. No Conflicting Agreements. There is no charter, bylaw, stock
provision or other document pertaining to the organization, power or
authority of Borrower and no provision of any existing agreement, mortgage,
indenture or contract binding on Borrower or affecting its property, which
would conflict with or in any way prevent the execution, delivery or
carrying out of the terms of this Agreement and the other Loan Documents,
and violation of which would have a Material Adverse Effect on the
Borrower.
F. Ownership of Assets. Borrower has good title to, or a valid
leasehold interest in, its assets, and its assets are free and clear of
liens, except those granted to Bank, except as disclosed in Schedule B
attached hereto.
G. Taxes. All taxes and assessments due and payable by Borrower have
been paid or are being contested in good faith by appropriate proceedings
and Borrower has filed all tax returns which it is required to file, or has
been granted extensions of time to file such tax returns.
H. Financial Statements. The audited financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved, with respect
to Borrower, and fairly present Borrower's financial condition as of the
date or dates thereof, and there has been no material adverse change in
Borrower's or such companies' financial condition or operations since
September 30, 1999. To the best of its knowledge, all factual information
furnished by Borrower to Bank in connection with this Agreement and the
other Loan Documents is and will be accurate and complete on the date as of
which such information is delivered to Bank and is not and will not be
incomplete by the omission of any material fact necessary to make such
information not misleading.
I. Place of Business. Borrower's chief executive office is located at:
0000 Xxxxxx Xxxx Xxxx, Xxxxx Xxxxxxxx 00000.
J. Environmental Matters. To the best of Borrower's knowledge after
diligent investigation, the conduct of Borrower's business operations does
not and will not violate any federal laws, rules or ordinances for
environmental protection, regulations of the Environmental Protection
Agency, any applicable local or state law, rule, regulation or rule of
common law or any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials, and Borrower will not use or permit any
other party to use any Hazardous Materials at Borrower's places of business
except such materials as are incidental to Borrower's normal course of
business, maintenance and repairs and which are handled in compliance with
all applicable environmental laws. Borrower agrees to permit Bank, its
agents, contractors and employees to enter and inspect any of Borrower's
places of business or any other property of Borrower at any reasonable
times upon three (3) days prior notice for the purposes of conducting an
environmental investigation and audit (including taking physical samples)
to insure that Borrower is complying with this covenant. Borrower agrees to
reimburse Bank on demand for the reasonable costs of one such environmental
investigation and audit annually. Borrower shall provide Bank, its agents,
contractors, employees and representatives with access to and copies of any
and all data and documents relating to or dealing with any Hazardous
Materials used, generated, manufactured, stored or disposed of by
Borrower's business operations within five (5) days of the request
therefore.
K. No Material Adverse Effect. Neither this Agreement nor any of the
Loan Documents, nor any written statements when furnished to the Bank by or
on behalf of the Borrower in connection with the Loans or the Loan
Documents, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein
not misleading. To the best knowledge of the Borrower, there is no material
fact that the Borrower has not disclosed to the Bank in writing that would
reasonably be deemed to have a Material Adverse Effect on the Borrower.
L. Year 2000 Compliance. Borrower represents that it has (i) initiated
a review and assessment of all areas within its and each of its
subsidiaries' businesses and operations (including those affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by Borrower or
any of its subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis and (iii) to date, implemented that
plan in accordance with that timetable. Borrower represents that all
computer applications that are material to its or any of its subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant"), except to the extent that a failure to
do so will not have a material adverse effect on its business, financial
condition, or ability to repay the Loan.
M. Continuation of Representation and Warranties. All representations
and warranties made under this Agreement shall be deemed to be made at and
as of the date hereof and at and as of the date of any future advance under
the Loan; provided, however, that the Borrower shall have no duty to update
any schedules or exhibits to this Agreement at the time of any advance
absent the occurrence of a change that would have a Material Adverse Effect
on the Borrower.
6. AFFIRMATIVE COVENANTS. Until full payment and performance of all
Obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. Financial Condition. Maintain Borrower's financial condition,
determined in accordance with GAAP applied on a consistent basis throughout
the period involved, as follows:
(i) Maintain a Tangible Net Worth of not less than $1,250,000 at
December 31, 1999 and as of the end of each fiscal quarter thereafter.
B. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's books of account
and other records at such reasonable times and as often as Bank may desire.
Borrower agrees to reimburse the Bank on demand for the reasonable costs of
one such inspection annually. Unless written notice of another location is
given to Bank, Borrower's books and records will be located at Borrower's
chief executive office set forth above. All financial statements called for
below shall be prepared in form and content acceptable to Bank and by
independent certified public accountants acceptable to Bank.
In addition, Borrower will:
(i) Furnish to Bank audited consolidated financial statements of
Borrower for each fiscal year of Borrower, within 120 days after the close
of each such fiscal year.
(ii) Furnish to Bank monthly consolidated financial statements
(including a balance sheet and profit and loss statement) of Borrower,
which shall be prepared by Borrower, for each month of each fiscal year of
Borrower, within 30 days after the end of each month.
(iii) Furnish to Bank a compliance certificate for (and executed by an
authorized representative of) Borrower concurrently with and dated as of
the date of delivery of each of the financial statements as required in
paragraphs i and ii above, containing (a) a certification that the
financial statements of even date are true and correct and that the
Borrower is not in default under the terms of this Agreement, and (b)
computations and conclusions, in such detail as Bank may request, with
respect to compliance with this Agreement, and the other Loan Documents,
including computations of all quantitative covenants, which compliance
certificate shall be substantially in the form of Exhibit B attached
hereto.
(iv) Furnish to Bank promptly such additional information, reports and
statements respecting the business operations and financial condition of
Borrower from time to time, as Bank may reasonably request. Without
limiting the scope of the preceding sentence, Borrower shall furnish Bank a
copy of its quarterly report on Form 10-Q promptly upon the filing thereof
with the Securities and Exchange Commission.
C. Insurance. Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same
vicinity, specifically to include fire and extended coverage insurance
covering all assets, business interruption insurance, workers compensation
insurance and liability insurance, all to be with such companies and in
such amounts as are satisfactory to Bank and with respect to insurance on
the Collateral, to contain a mortgagee clause naming Bank as a loss payee
or an additional insured (as applicable) as its interest may appear and
providing for at least 30 days prior notice to Bank of any cancellation
thereof. Satisfactory evidence of such insurance will be supplied to Bank
prior to funding under the Loan and 30 days prior to each policy renewal.
D. Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
E. Adverse Conditions or Events. Promptly advise Bank in writing of
(i) any condition, event or act which comes to its attention that Borrower
reasonably believes would or might have a Material Adverse Effect, (ii) any
litigation filed by or against Borrower, an adverse outcome of which could
reasonably be expected to have a Material Adverse Effect on Borrower, (iii)
any event that has occurred that would constitute an event of default under
any Loan Documents and (iv) any uninsured or partially uninsured loss
through fire, theft, liability or property damage in excess of an aggregate
of $500,000.00.
F. Taxes and Other Obligations. Pay all of its taxes, assessments and
other obligations, including, but not limited to taxes, costs or other
expenses arising out of this transaction, as the same become due and
payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.
G. Maintenance. Maintain all of its tangible property in good
condition and repair, excepting ordinary wear and tear, and make all
necessary replacements thereof (provided that Borrower shall not be
required to maintain any obsolete or immaterial property), and preserve and
maintain all licenses, trademarks, privileges, permits, franchises,
certificates and the like necessary for the operation of its business.
H. Notification of Environmental Claims. Borrower shall immediately
advise Bank in writing of (i) any and all enforcement, cleanup, remedial,
removal, or other governmental or regulatory actions instituted, completed
or threatened pursuant to any applicable federal, state, or local laws,
ordinances or regulations relating to any Hazardous Materials affecting
Borrower's business operations; and (ii) all claims made or threatened by
any third party against Borrower relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Materials. Borrower shall immediately notify Bank of any remedial action
taken by Borrower with respect to Borrower's business operations.
I. Notification of Lack of Year 2000 Compliance. Borrower further
represents that it will promptly notify the Bank in the event Borrower
discovers or determines that any computer application that is material to
its or any of its subsidiaries' businesses and operations is not Year 2000
compliant, except to the extent that such failure will not have a material
adverse effect on its business, financial condition or ability to repay the
Loan.
7. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will not, without the
prior written consent of Bank (and without limiting any requirement of any other
Loan Documents):
A. Ownership and Management. Make or permit to be made any material
change in the ownership or executive management of the Borrower.
B. Transfer of Assets or Control. Sell, lease, sell and leaseback,
assign or otherwise dispose of or transfer any assets, except in the normal
course of its business, or enter into any merger or consolidation, or
transfer control or ownership of the Borrower or form or acquire any
subsidiary. It is provided, however, that this covenant shall not prohibit
Borrower from entering into that certain joint venture with Schoeller
Textil AG, as has been disclosed to the Bank prior to the date hereof.
C. Liens. Grant, suffer or permit any contractual or noncontractual
lien on or security interest in its assets, other than Permitted Liens. It
is expressly provided, however, that leases for office equipment and
vehicles entered into in the normal course of Borrower's business shall not
be subject to this covenant.
D. Extensions of Credit. Make any loan or advance to any individual,
partnership, corporation or other entity, except advances to employees of
the Borrower for expenses incurred in the ordinary course of business.
E. Borrowings. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, lease payments under capital
leases, as surety or guarantor for the debt for another, or otherwise),
other than to Bank, except for normal trade debts incurred in the ordinary
course of Borrower's business; and existing indebtedness disclosed to Bank
in writing and acknowledged by Bank prior to the date of this Agreement.
F. Dividends and Distributions. Pay any dividend (other than dividends
payable in capital stock of Borrower) or make any distribution on any
shares of any class of its capital stock, other than in the normal course
of Borrower's business, or apply any of its property or assets to the
purchase, redemption or other retirement of any shares of any class of
capital stock of Borrower, or in any way amend its capital structure.
G. Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
8. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents if it shall default in the payment of any
amounts due and owing under the Loan. Borrower shall also be in default if it
should fail to timely and properly observe, keep or perform any term, covenant,
agreement or condition in any Loan Document or in any other loan agreement,
promissory note, security agreement, deed of trust, assignment, pledge or other
contract securing or evidencing payment of any indebtedness of Borrower to Bank
or any affiliate or subsidiary of Bank of America Corporation, and such default
shall continue uncured for a period of thirty (30) days; provided, further, that
if the Borrower has undertaken to cure any such default and is diligently
prosecuting such cure, to the reasonable satisfaction of Bank, it shall not
constitute a default under this Agreement if the subject default remains uncured
beyond thirty (30) days.
9. REMEDIES UPON DEFAULT. If an event of default shall occur, Bank shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.
10. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to the other party at the following address:
Borrower: Xxxxxx Technologies, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Chief Financial Officer
With a copy to:
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Bank: Bank of America, N.A.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Attn: Xx Xxxxxxx
Commercial Banking Officer
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by hand delivery, upon delivery;
B. If sent by a nationally-recognized overnight courier, on the
business day following the date sent; or
C. If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid.
11. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of Bank's in-house counsel), incurred by Bank in connection with (A)
negotiation and preparation of this Agreement and each of the Loan Documents,
and (B) Bank's continued administration thereof. Whenever in the Loan Documents
reference is made to "attorneys' fees" or "counsel fees", each such reference
shall mean and refer to the reasonable fees (and expenses) actually incurred by
the party retaining such attorneys or counsel.
12. MISCELLANEOUS. Borrower and Bank further covenant and agree as follows,
without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all
other rights of Bank, and no delay in exercising any right shall operate as
a waiver thereof, nor shall any single or partial exercise by Bank of any
right preclude any other or future exercise thereof or the exercise of any
other right. Borrower expressly waives any presentment, demand, protest or
other notice of any kind, including but not limited to notice of intent to
accelerate and notice of acceleration. No notice to or demand on Borrower
in any case shall, of itself, entitle Borrower to any other or future
notice or demand in similar or other circumstances.
B. Applicable Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance
with the laws of the State of North Carolina and applicable federal law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and
signed by an officer of Bank, and then shall be effective only in the
specified instance and for the purpose for which given. This Loan Agreement
is binding upon Borrower, its successors and assigns, and inures to the
benefit of Bank, its successors and assigns; however, no assignment or
other transfer of Borrower's rights or obligations hereunder shall be made
or be effective without Bank's prior written consent, nor shall it relieve
Borrower of any obligations hereunder. There is no third party beneficiary
of this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be
in form and content satisfactory to Bank and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or
validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document to any person or
circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
F. Indemnification. Borrower shall indemnify, defend and hold Bank and
its successors and assigns harmless from and against any and all claims,
demands, suits, losses, damages, assessments, fines, penalties, costs or
other expenses (including reasonable attorneys' fees and court costs)
arising from or in any way related to any of the transactions contemplated
hereby, including but not limited to actual or threatened damage to the
environment, agency costs of investigation, personal injury or death, or
property damage, due to a release or alleged release of Hazardous
Materials, arising from Borrower's business operations, any other property
owned by Borrower or in the surface or ground water arising from Borrower's
business operations, or gaseous emissions arising from Borrower's business
operations or any other condition existing or arising from Borrower's
business operations resulting from the use or existence of Hazardous
Materials, whether such claim proves to be true or false. Borrower further
agrees that its indemnity obligations shall include, but are not limited
to, liability for damages resulting from the personal injury or death of an
employee of the Borrower, regardless of whether the Borrower has paid the
employee under the worker's compensation laws of any state or other similar
federal or state legislation for the protection of employees. The term
"property damage" as used in this paragraph includes, but is not limited
to, damage to any real or personal property of the Borrower, the Bank, and
of any third parties. The Borrower's obligations under this paragraph shall
survive the repayment of the Loans and foreclosure of the Deed of Trust
securing the Loans.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the
making of the Loans and shall continue in full force and effect so long as
the Loans are outstanding or the obligation of the Bank to make any
advances under the Line of Credit shall not have expired.
H. Updated Appraisals and Maintenance of Collateral Value. Bank may at
its option, at Borrower's expense, obtain an appraisal of any Collateral
securing payment of the Loan, which appraisal shall be prepared in
accordance with applicable bank regulatory agency regulations and the
written instructions from Bank by a third-party appraiser engaged directly
by Bank. The costs of each such appraisal shall be payable by Borrower to
Bank on demand. If such appraisal shows the market value of the Collateral
has declined, Borrower agrees that, upon demand by Bank, it will
immediately either pledge additional collateral in form and substance
satisfactory to Bank or make such payments as shall be necessary to reduce
the principal balance outstanding under the Loan.
13. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO, INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE, INC., OR ANY SUCCESSOR THEREOF
("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS AGREEMENT AND
ADMINISTERED BY J.A.M.S., WHICH WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT
BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH
AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
14. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
BORROWER:
XXXXXX TECHNOLOGIES, INC.
ATTEST:
By:/s/ Xxxxxxx Xxxxx
-------------------
/s/ Xxxxxxx XxXxxxxxx Title: Chief Financial Officer
--------------------- -----------------------
Secretary
[Corporate Seal]
BANK:
BANK OF AMERICA, N.A.
By:/s/
-------------------------------
Title: Commercial Banking Officer
---------------------------
EXHIBIT A
BORROWING BASE AGREEMENT
[ THIS BORROWING BASE AGREEMENT CONTAINS SOME PROVISIONS PRECEDED BY BOXES. IF
MARKED, THE PROVISION APPLIES TO THIS TRANSACTION. IF NOT MARKED, THE PROVISION
DOES NOT APPLY TO THIS TRANSACTION.]
1. Borrowing Base. The aggregate principal amount of all amounts from time
to time advanced pursuant to the terms of that promissory note dated
February___, 2000 in the principal amount of $2,000,000 (the "Note") shall not
exceed the Maximum Amount.
"Maximum Amount" shall mean the lesser of $2,000,000 or the Borrowing Base.
The "Borrowing Base" at any time, shall be equal to 80% of Eligible Accounts
Receivable, plus 50% of Eligible Inventory, plus 50% of the net book value of
Equipment, as follows:
As used herein, "Eligible Accounts Receivable" shall mean all Accounts
Receivable of Borrower which have been created in the ordinary course of
Borrower's business and for which Borrower's right to receive payment is
absolute and not contingent upon the fulfillment of any condition whatsoever,
and shall not include:
[x] any account which remains unpaid more than ninety (90) days past
the invoice date;
[x] any account for which there exists a right of set off, defense or
discount (except regular discounts allowed in the ordinary course of
business to promote prompt payment) and for which no defense or
counterclaim has been asserted;
[_] any account which represents an obligation of any local, state or
federal governmental agency or entity;
[x] Any account which arises out of a contract or order which, by its
terms, forbids or makes void or unenforceable any assignment by Borrower to
Bank of the account receivable arising with respect thereto;
[x] Any account arising from a "sale on approval," "sale or return,"
"consignment," or subject to any other repurchase or return agreement;
[_] any account which represents an obligation of a customer which
is not a resident of the United States, unless such account is supported
by a letter of credit in form and substance acceptable to Bank;
[x] Any account which arises from the sale or lease to or performance
of services for, or represents an obligation of, an employee, affiliate,
partner, parent or subsidiary of Borrower;
[x] Any account which represents an obligation of a Customer of
Borrower when 80% or more of Borrower's accounts from such Customer are not
eligible pursuant to the foregoing formula;
[x] Any unapplied credits over 90 days old;
and any account on which the Bank is not or does not continue to be,
in the Bank's sole discretion, satisfied with the credit standing of the
Customer of Borrower in relation to the amount of credit extended.
"Accounts Receivable" shall mean all of the Borrower's accounts,
instruments, contract rights, chattel paper, documents, and general intangibles
arising from the sale of goods and/or the rendition of services by the Borrower
in the ordinary course of business, and the proceeds thereof and all security
and guaranties therefor, whether now existing or hereafter created, and all
returned, reclaimed or repossessed goods, and all books and records pertaining
to the foregoing.
"Eligible Inventory" shall mean the Borrower's finished goods inventory,
which is currently salable.
"Equipment" means all non-obsolete machinery and equipment that is
currently useable in the normal course of business of the Borrower.
2. Advances. The amounts of advances under the Note shall be determined in
the sole discretion of the Bank consistent with the value of the Eligible
Accounts Receivable, the Eligible Inventory, and the Equipment, taking into
account all fluctuations of the value thereof in light of the Bank's experience
and sound business principles. The Bank shall be under no obligation to make any
advance to Borrower in excess of the limitations stated above.
3. Reporting. In addition to any reporting requirements required under the
Loan Agreement to which this Borrowing Base Agreement is attached, the Borrower
will submit the following in form and substance satisfactory to Bank:
[x] Accounts Receivable Aging. Not later than fifteen (15) days after
and as of the end of each month, a listing of accounts receivable aged from
date of invoice.
[x] Borrowing Base Certificate. Not later than thirty (30) days after
the end of each fiscal month, Borrower will submit a Borrowing Base
Certificate in the form attached hereto as Exhibit A-1. Borrower shall also
submit a Borrowing Base Certificate with any request for an advance under
the Note, if the most recent Borrowing Base Certificate was provided to the
Bank more than ten days prior to such request.
4. [ ] Lock Box Arrangement. Bank and Borrower shall, upon request of Bank,
establish and maintain one or more special lock box or blocked accounts for the
collection of the Accounts Receivables. Each such special account shall be with
a bank satisfactory to the Bank (which may be an affiliate of the Bank) and
shall be subject to the Bank's standard form agreement. Any checks or other
remittances against Accounts Receivables which are received by the Borrower
shall be held in trust for the Bank and turned over by the Borrower to the Bank
or to a person designated by the Bank in the identical form received (except for
any necessary endorsement) as speedily as possible.
5. Mandatory Payment. In the event the aggregate principal outstanding
balance of advances under the Revolver exceeds the Maximum Amount, Borrower
shall immediately and without notice or demand of any kind, make such payments
as shall be necessary to reduce the principal balance of the Revolver below the
Maximum Amount.
Borrower: Bank:
XXXXXX TECHNOLOGIES, INC. BANK OF AMERICA, N.A.
By: /s/Xxxxxxx Xxxxx (Seal) By: /s/________________(Seal)
Name: XXXXXXX XXXXX Name: /s/________________
Title: Chief Financial Officer Title: Commercial Banking Officer
EXHIBIT A-1
BORROWING BASE CERTIFICATE
Status as of _______________, 19___.
In accordance with the terms of the Borrowing Base Agreement attached as Exhibit
A to that Loan Agreement dated February ___, 2000, by and between Xxxxxx
Technologies, Inc. and Bank of America, N.A., we hereby represent and warrant as
follows:
1. Total Accounts Receivable $____________
2. Less ineligible accounts receivable
(as set forth in the Borrowing Base
Agreement) $____________
3. Eligible Accounts Receivable $____________
4. 80% of Eligible Accounts Receivable $____________
5. Eligible Inventory: $____________
6. 50% of Eligible Inventory $____________
7. Net Book Value ("NBV")
of Equipment $____________
8. 50% of NBV of Equipment $____________
9. Line 4 + Line 6 + Line 8 $____________
10. Maximum loan amount $2,000,000.00
11. Outstanding balance as of report date $____________
12. Available for further advances (lesser of line 9 or line 10
minus line 11) $____________
13. If line 12 is negative, amount to be
repaid immediately to Bank $____________
The undersigned does hereby certify that the foregoing is true and correct.
The undersigned does further acknowledge that the Bank is relying upon this
certificate and any supporting documents to grant or continue to grant credit to
it, and further warrants and represents that no event of default has occurred,
or would, with the passage of time or the giving of notice, or both, occur under
the above-referenced Loan Agreement.
Borrower:
XXXXXX TECHNOLOGIES, INC.
By:________________________________
Title: ____________________________
SCHEDULE A
(Pending Litigation)
SCHEDULE B
(Liens, encumbrances and leases)
EXHIBIT B
(Form of Compliance Certificate)
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to Section 6(B)(iii) of
the Loan Agreement dated as of February__, 2000 (together with all amendments
and modifications, if any, from time to time made thereto, the "Loan
Agreement"), between Xxxxxx Technologies, Inc. (the "Borrower") and Bank of
America, N.A. Unless otherwise defined, terms used herein have the meanings
provided in the Loan Agreement.
The undersigned, being the duly elected, qualified and acting Chief
Financial Officer of the Borrower, on behalf of the Borrower and solely in his
or her capacity as an officer of the Borrower, hereby certifies and warrants
that:
1. He/she is the Chief Financial Officer of the Borrower and that, as such,
he/she is authorized to execute this certificate on behalf of the Borrower.
2. As of ________________, 20____:
(a) The Borrower was not in default of any of the provisions
of the Loan Agreement during the period as to which this
Compliance Certificate relates;
(b) The Borrower's Tangible Net Worth was $__________________;
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 20____.
XXXXXX TECHNOLOGIES, INC.
By: _____________________________________
Title: Chief Financial Officer
