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Exhibit: 10.17T
[FIRST UNION LOGO]
LOAN AGREEMENT
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Xxxxx Corporation d/b/a/ TMC Soundprints
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into March 30, 1998, by and
between Bank and Borrower, a Corporation (For profit) organized under the laws
of Delaware.
Borrower has applied to Bank for a loan or loans (individually and
collectively, the "Loan") evidenced by one or more promissory notes (whether
one or more, the "Note") as follows:
Line of Credit - in the principal amount of $1,200,000.00 which is evidenced by
the Promissory Note dated March 30, 1998 ("Line of Credit Note"), under which
Borrower may borrow, repay, and reborrow, from time to time, so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount. The Loan proceeds are to be used by Borrower solely to finance
inventory and accounts receivable. Bank's obligation to advance or readvance
under the Line of Credit Note shall terminate if Borrower is in Default under
the Line of Credit Note.
Term Loan - in the principal amount of $250,000.00 which is evidenced by the
Promissory Note dated March 30, 1998. The loan proceeds are to be used by
Borrower solely acquisition of computer equipment and medium term working
capital.
This Agreement also amends and restates in its entirety that certain Loan
Agreement dated July 14, 1997 and applies to govern all of the loans thereby.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As
used in this Agreement as to Borrower, "Subsidiary" shall mean any corporation
of which more than 50% of the issued and outstanding voting stock is owned
directly or indirectly by Borrower. As to Borrower, "Affiliate" shall have the
meaning as defined in 11 U.S.C. Section 101, except that the term "debtor"
therein shall be substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties
contained in this Agreement, Bank is willing to extend credit to Borrower upon
the terms and subject to the conditions set forth herein, and Bank and Borrower
agree as follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct
and complete. Any such information relating to Borrower's financial condition
will accurately reflect Borrower's financial condition as of the date(s)
thereof, (including all contingent liabilities of every type), and Borrower
further represents that its financial condition has not changed materially or
adversely since the date(s) of such documents.
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Authorization; Non-Contravention. The execution, delivery and performance by
Borrower and any guarantor, as applicable, of this Agreement and other Loan
Documents to which it is a party are within its power, have been duly
authorized by all necessary action taken by the duly authorized officers of
Borrower and any guarantors and, if necessary, by making appropriate filings
with any governmental agency or unit and are the legal, binding, valid and
enforceable obligations of Borrower and any guarantors; and do not (i)
contravene, or constitute (with or without the giving of notice or lapse of
time or both) a violation of any provision of applicable law, a violation of
the organizational documents of Borrower or any guarantor, or a default under
any agreement, judgment, injunction, order, decree or other instrument binding
upon or affecting Borrower or any guarantor, (ii) result in the creation or
imposition of any lien (other than the lien(s) created by the Loan Documents)
on any of Borrower's or guarantor's assets, or (iii) give cause for the
acceleration of any obligations of Borrower or any guarantor to any other
creditor. ASSET OWNERSHIP. Borrower has good and marketable title to all of the
properties and assets reflected on the balance sheets and financial statements
supplied Bank by Borrower, and all such properties and assets are free and
clear of mortgages, security deeds, pledges, liens, charges, and all other
encumbrances, except as otherwise disclosed to Bank by Borrower in writing
("Permitted Liens"). To Borrower's knowledge, no default has occurred under any
Permitted Liens and no claims or interests adverse to Borrower's present rights
in its properties and assets have arisen. DISCHARGE OF LIENS AND TAXES.
Borrower has duly filed, paid and/or discharged all taxes or other claims which
may become a lien on any of its property or assets, except to the extent that
such items are being appropriately contested in good faith and an adequate
reserve for the payment thereof is being maintained. SUFFICIENCY OF CAPITAL.
Borrower is not, and after consummation of this Agreement and after giving
effect to all indebtedness incurred and liens created by Borrower in connection
with the Loan, will not be, insolvent within the meaning of 11 U.S.C. Sec.
101(32). COMPLIANCE WITH LAWS. Borrower is in compliance in all respects with
all federal, state and local laws, rules and regulations applicable to its
properties, operations, business, and finances, including, without limitation,
any federal or state laws relating to liquor (including 18 U.S.C. Sec. 3617, et
seq.) or narcotics (including 21 U.S.C. Sec. 801, et seq.) and/or any
commercial crimes; all applicable federal, state and local laws and regulations
intended to protect the environment; and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), if applicable. ORGANIZATION AND
AUTHORITY. Each corporate or limited liability company Borrower and any
guarantor, as applicable, is duly created, validly existing and in good
standing under the laws of the state of its organization, and has all powers,
governmental licenses, authorizations, consents and approvals required to
operate its business as now conducted. Each corporate or limited liability
company Borrower and any guarantor, if any, is duly qualified, licensed and in
good standing in each jurisdiction where qualification or licensing is required
by the nature of its business or the character and location of its property,
business or customers, and in which the failure to so qualify or be licensed,
as the case may be, in the aggregate, could have a material adverse effect on
the business, financial position, results of operations, properties or
prospects of Borrower or any such guarantor. NO LITIGATION. There are no
pending or threatened suits, claims or demands against Borrower or any
guarantor that have not been disclosed to Bank by Borrower in writing. ERISA.
Each employee pension benefit plan, as defined in ERISA, maintained by Borrower
meets, as of the date hereof, the minimum funding standards of ERISA and all
applicable regulations thereto and requirements thereof, and of the Internal
Revenue Code of 1954, as amended. No "Prohibited Transaction" or "Reportable
Event" (as both terms are defined by ERISA) has occurred with respect to any
such plan.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. ACCESS TO BOOKS & RECORDS. Allow Bank, or its agents, during normal
business hours, access to the books, records and
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such other documents of Borrower as Bank shall reasonably require, and allow
Bank to make copies thereof at Bank's expense. Insurance. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. NOTICE OF DEFAULT AND OTHER
NOTICES. (a) Notice of Default. Furnish to Bank immediately upon becoming aware
of the existence of any condition or event which constitutes a Default (as
defined in the Loan Documents) or any event which, upon the giving of notice or
lapse of time or both, may become a Default, written notice specifying the
nature and period of existence thereof and the action which Borrower is taking
or proposes to take with respect thereto. (b) Other Notices. Promptly notify
Bank in writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound,
or any acceleration of the maturity of any indebtedness owing by Borrower; (iii)
any material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. PAYMENT OF DEBTS. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities of whatever nature or amount, except those which Borrower in
good faith disputes. REPORTS AND PROXIES. Deliver to Bank, promptly, a copy of
all financial statements, reports, notices, and proxy statements, sent by
Borrower to stockholders, and all regular or periodic reports required to be
filed by Borrower with any governmental agency or authority. OTHER FINANCIAL
INFORMATION. Deliver promptly such other information regarding the operation,
business affairs, and financial condition of Borrower which Bank may reasonably
request. NON-DEFAULT CERTIFICATE FROM BORROWER. Deliver to Bank, with the
Financial Statements required herein, a certificate signed by Borrower, if
Borrower is an individual, or by a principal financial officer of Borrower
warranting that no "Default" as specified in the Loan Documents nor any event
which, upon the giving of notice or lapse of time or both, would constitute such
a Default, has occurred. ESTOPPEL CERTIFICATE. Furnish, within 15 days after
request by Bank, a written statement duly acknowledged of the amount due under
the Loan and whether offsets or defenses exist against the Obligations.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. JUDGEMENT ENTERED. Permit the entry of any monetary
judgement or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due Borrower. GOVERNMENT INTERVENTION. Permit the assertion or making of
any seizure, vesting or intervention by or under authority of any government by
which the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or such business is curtailed or
materially impaired. PREPAYMENT OF OTHER DEBT. Retire any long-term debt entered
into prior to the date of this Agreement at a date in advance of its legal
obligation to do so. RETIRE OR REPURCHASE CAPITAL STOCK. Retire or otherwise
acquire any of its capital stock.
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FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing: TANGIBLE NET WORTH. Borrower shall, at all times,
maintain Tangible Net Worth of at least $750,000.00, "Tangible Net Worth"
shall mean the total assets minus total liabilities. For purposes of this
computation, the aggregate amount of any intangible assets of Borrower
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, and brand names, shall be
subtracted from total assets, and total liabilities shall include fully
subordinated debt. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. Borrower
shall, at all times, maintain a ratio of Total Liabilities, including fully
subordinated debt, divided by Tangible Net Worth of not more than 2.50 to 1.00.
For purposes of this computation, "Total Liabilities" shall mean all
liabilities of Borrower, including capitalized leases and all reserves for
deferred taxes and other deferred sums appearing on the liabilities side of a
balance sheet of Borrower, in accordance with generally accepted accounting
principles applied on a consistent basis.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, reviewed financial statements reflecting
its operations during such fiscal year, including, without limitation, a
balance sheet, profit and loss statement and statement of cash flows, with
supporting schedules; all on a consolidated and consolidating basis and in
reasonable detail, prepared in conformity with generally accepted accounting
principles, applied on a basis consistent with that of the preceding year. All
such statements shall be reviewed by an independent certified public accountant
acceptable to Bank. Such statements shall be certified as to their correctness
by a principal financial officer of Borrower.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
45 days after the close of each such period, quarterly agings of accounts
receivable and payable within 15 days after the close of each such period; all
in reasonable detail and prepared in conformity with generally accepted
accounting principles, applied on a basis consistent with that of the preceding
year. Such statements shall be certified as to their correctness by a principal
financial officer of Borrower.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Borrower's
financial condition. Such information shall be true, complete, and accurate
BORROWING BASE. As to the Line of Credit Note in the principal amount of
$1,200,000.00 and the letters of credit in the amount of up to $300,000.00, the
following provisions shall apply:
BORROWING LIMITATION. The maximum principal amount that Borrower may borrow
shall be the lesser of the principal amount stated in the Line of Credit Note
or the maximum principal amount allowed under this addendum (the "Maximum
Principal Amount"), provided, however that the availability created under
Borrowing base must be sufficient to cover any letter of credit exposure in
addition to hard dollar borrowings.
The Maximum Principal Amount shall be an amount equal to 75% of the net amount
of Eligible Accounts, plus 25% of an amount equal to its value of Eligible
Inventory, less the amount of any Reserve required by Bank.
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"Eligible Account" refers to an account receivable not more than 90 days from
the date of the original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility requirements: (a) the
sale of goods or services reflected in such account is final and such goods and
services have been delivered or provided and accepted by the account debtor
and payment for such is owing; (b) the invoices comprising an account are not
subject to any claims, returns or disputes of any kind; (c) the account debtor
is not insolvent; (d) the account debtor has its principal place of business in
the United States; (e) the account debtor is not an affiliate of Borrower and
is not a supplier to Borrower and the account is not otherwise exposed to risk
of set-off; (f) not more than thirty percent of the original invoices owing
Borrower by the account debtor are more than ninety days from the date of the
original invoice.
"Eligible Inventory" means inventory of raw material and finished goods in
Borrower's possession that is held for use or sale in the ordinary course of
Borrower's business and is not unmerchantable or obsolete and is subject to a
first priority perfected security interest in favor of Bank. The value of the
inventory will be determined by Bank and will be valued at the lower of cost or
market on a first-in, first-out basis. Eligible Inventory may not exceed a
maximum value of $400,000.00 for purposes of borrowing base calculations.
"Reserves" may be required at any time and from time to time by Bank without
prior notice to Borrower in amounts deemed by Bank to be adequate to reserve
against outstanding letter of credit, outstanding bankers acceptances,
Borrower's obligations to Bank or its affiliates or any guarantees or other
contingent debt of Borrower.
REQUIRED REPORTS. Borrower may certify to Bank by the fifteenth day of each
month, the amount of Eligible Accounts and the value of Eligible Inventory as
of the first day of each month, on forms required by Bank together with all
detail and supporting documents requested by Bank. Bank may at any time and
from time to time, during Bank's normal business hours, enter upon any business
premises of Borrower and audit Borrower's accounts and inventory. Bank's
determination of the amount of Eligible Accounts and the value of Eligible
inventory shall at all times be indisputable and deemed correct. The Borrower,
at all times, shall cooperate with Bank without limitation by providing Bank
information and access to Borrower's premises and business records and shall be
courteous to Bank's agents.
CONTINUING REPRESENTATIONS. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Line of Credit
Notes, the outstanding principal balance shall not exceed the lesser of the
Maximum Principal Amount or the principal amount stated in the Line of Credit
Note ( the "Borrowing Limit"). Borrower agrees to pay any advances in excess of
the Borrowing Limit immediately upon receipt by Borrower of written notice that
the Borrowing Limit has been exceeded.
CONDITIONS PRECEDENT. The obligations of the Bank to make the Loan and any
advances pursuant to this Agreement are subject to the following conditions
precedent: ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting
documents as Bank or its counsel may reasonably request.
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IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
Xxxxx Corporation d/b/a TMC Soundprints
Taxpayer Identification Number: 00-0000000
CORPORATE By: /s/ Xxxxxxx X. Xxxxxxx
SEAL ---------------------------
Xxxxxxx X. Xxxxxxx, President
First Union National Bank
CORPORATE By: /s/ Xxxxxx X. Xxxxxx
SEAL ----------------------------
Xxxxxx X. Xxxxxx, Vice President
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