EXHIBIT 10.1
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into June 7, 2002 to
be effective as of June 3, 2002 (References to the date of this Loan Agreement
contained herein shall be deemed to mean June 3, 2002.) by and between MUSI
Investments S.A., a Luxembourg societe anonyme ("Lender"), 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,
Lender 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. NOTE. The promissory note described in Section 2 hereof.
F. 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.
G. LOANS. Collectively, the loans made by Lender to Borrower
under this Agreement and any other subsequent loan or extension of credit by
Lender to the Borrower that is subject to this Agreement.
H. LOAN DOCUMENTS. Loan Documents means this Loan Agreement, the
Note executed by Borrower in favor of Lender and all other documents,
instruments, guaranties, certificates and agreements executed and/or delivered
by Borrower, any guarantor or third party in connection with this Loan
Agreement.
I. MATERIAL ADVERSE EFFECT. Any material adverse effect on (i)
the business, assets, operations or financial condition of Borrower and its
subsidiaries, taken as a whole, (ii) the Borrower's ability to pay the
Obligations in accordance with the terms thereof, or (iii) the Collateral or
Lender's security interest in the Collateral or the priority of such security
interest.
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 Lender 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 Lender under this Agreement or any of the other Loan Documents.
K. PERMITTED LIENS. Collectively, (i) all liens or security
interests securing indebtedness owed to Lender, (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 Lender, the Borrower will establish reserves satisfactory to
the Lender, (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 Lender, the Borrower will establish reserves
satisfactory to the Lender; (vi) purchase money security interests granted by
the Borrower in the ordinary course of its business; and (vii) liens and
security interests described on Schedule 1K attached hereto. -----------
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. Prime Rate shall have the same meaning set forth
in the Note.
N. TANGIBLE NET WORTH. The amount by which the Borrower's total
assets exceed total liabilities, in accordance with GAAP, minus: (i) goodwill,
net of accumulated amortization; (ii) contract rights, net of accumulated
amortization; (iii) leasehold improvements, net of accumulated depreciation;
(iv) assets representing claims on (A) shareholders, directors or officers or
(B) Affiliates and (v) other assets net
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of accumulated depreciation and/or amortization constituting intangible assets
including, without limitation, any capitalized 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.
A. Subject to the terms of this Agreement, Lender hereby agrees
to extend a loan to Borrower (the "Loan"), in the principal amount of up to
Three Hundred Thousand Dollars ($300,000.00), for the exclusive purpose of
funding payroll, related taxes and benefits of the employees of the Borrower
(excluding the compensation of Xxxxxxx X. Xxxxxx). Lender agrees, on the terms
and conditions set forth herein and promptly upon Borrower's request, to make
advances to the Borrower from time to time before the Maturity Date in
accordance with the attached Schedule 8; provided that, immediately after each
such advance is made the aggregate outstanding principal amount of advances by
the Lender shall not exceed $300,000.00. Within the foregoing limits, the
Borrower may borrow, repay, prepay and reborrow under this Loan Agreement at
any time before the Maturity Date.
B. To evidence the Loan, Borrower shall execute and deliver to
Lender a convertible promissory note (the "Note") in the principal amount of up
to $300,000.00, which Note shall bear interest and be payable in accordance
with the terms set forth herein below. The Loan shall mature and become payable
in full on June 3, 2004 which date shall be the "Maturity Date."
C. Interest and Principal. Interest on the principal amount
outstanding under the Loan from time to time shall accrue at a variable rate of
the Prime Rate, plus seventy-five basis points (0.75%) per annum, which accrued
interest shall be payable quarterly in arrears. The principal of the Note shall
be repaid in full on the Maturity Date, together with all accrued but unpaid
interest.
D. Collateral Security. Repayment in full of all Obligations of
the Borrower shall be secured by the Collateral, such security interest to be
junior and subordinate to the security interests of DAMAD Holding AG and Bluwat
AG.
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 Lender a security interest
in and lien upon all of the property described below:
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A. A third 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 security interest in and lien upon all of the
Borrower's accounts, inventory, and general intangibles, and a third 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.
Lender's security interest in and lien on the Collateral shall be
junior and subordinate to the security interest and lien of DAMAD Holding AG
and Bluwat AG to such Collateral. Borrower agrees and undertakes to execute and
deliver to the Lender such deeds of trust, security agreements, pledge
agreements, assignments, financing statements, subordinations, certificates,
waivers, estoppel agreements, and other documentation, in form acceptable to
the Lender, as may be reasonably requested by the Lender in connection with the
Collateral. Borrower further agrees that all of the Collateral shall secure all
of the Obligations of the Borrower to the Lender. It is specifically agreed and
acknowledged by the parties hereto that the personal and real property owned by
Schoeller Xxxxxx Technologies GmbH, a joint venture between Borrower and
Schoeller Textil AG, shall not be deemed to be Collateral, as herein defined.
Lender agrees that it will release its security interest in the Borrower's
accounts receivable upon the establishment by Borrower of a program of
factoring such accounts receivable.
4. CONDITIONS PRECEDENT. The Lender's agreement to extend the
Loan to the Borrower is subject to the fulfillment, to the Lender's
satisfaction, of all of the following conditions:
A. Lender 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 Lender or counsel for the
Lender may reasonably request.
B. The Borrower shall have executed and delivered all
documentation for the Loan reasonably requested by the Lender, which shall be
in form and content reasonably acceptable to the Lender and its counsel.
C. The Borrower shall have provided to the Lender, in form
satisfactory to the Lender, all financial and other information concerning its
business and affairs, as reasonably requested by the Lender.
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D. 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 March 31, 2002 quarterly
financial statements.
E. 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.
F. Subject to the limitations set forth in Section 11, 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 Lender 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
(except as to franchise taxes which are being contested in good faith) and has
the power and authority to own its property and to carry on its 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, the failure to comply with would result in a Material Adverse Effect
on the Borrower.
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 which is likely to
result in a Material Adverse Effect on the Borrower, except as disclosed in
Schedule 5D 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.
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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 Lender, except as disclosed in Schedule 1K attached
hereto.
G. TAXES. Except as set forth on Schedule 5G attached hereto,
all material 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 material 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 Lender 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 March 31, 2002. To
the best of its knowledge, all factual information furnished by Borrower to
Lender 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 Lender 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, Xxxxxxx-Xxxxx, 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 material 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 material compliance
with all applicable environmental laws. Borrower agrees to permit Lender, 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 at Lender's expense
an environmental investigation and audit (including taking physical samples) to
insure that Borrower is complying with this covenant.
K. NO MATERIAL ADVERSE EFFECT. To the best knowledge of Borrower
neither this Agreement nor any of the other Loan Documents, nor any written
statements when furnished to the Lender 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
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disclosed to the Lender in writing that would reasonably be deemed to 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
Lender 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 as of the end of each fiscal quarter hereafter; provided that Lender
hereby waives compliance with this covenant for the quarter ended June 30,
2002.
B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system
of accounting satisfactory to Lender and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Lender'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 Lender may desire. If an
Event of Default has occurred and continues, Borrower agrees to reimburse the
Lender on demand for the reasonable costs of one such inspection conducted
during such Event of Default. Unless written notice of another location is
given to Lender, 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 Lender and by
independent certified public accountants acceptable to Lender.
In addition, Borrower will:
(i) Furnish to Lender audited consolidated financial
statements of Borrower for each fiscal year of Borrower, within 90 days after
the close of each such fiscal year.
(ii) Furnish to Lender 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 45 days after the end of each month.
(iii) Furnish to Lender for each fiscal quarter 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 for such fiscal quarter as required in paragraphs (i) and
(ii) above, containing (a) a certification that the financial statements of
each 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 Lender may request, with respect to compliance with Section of this
Agreement which compliance certificate shall be substantially in the form of
Exhibit A attached hereto.
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(iv) Furnish to Lender promptly such additional
information, reports and statements respecting the business operations and
financial condition of Borrower from time to time, as Lender may reasonably
request. Without limiting the scope of the preceding sentence, Borrower shall
furnish Lender a copy of its quarterly report on Form 10-QSB promptly upon the
filing thereof with the Securities and Exchange Commission.
C. RESERVATION OF SHARES. The Company will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued common stock for the purpose of enabling it to satisfy
any obligation to issue common stock upon conversion of the Note.
D. 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 Lender and with respect to insurance on the Collateral, to
contain a mortgagee clause naming Lender 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 Lender of any cancellation thereof. Satisfactory
evidence of such insurance will be supplied to Lender prior to funding under
the Loan and 30 days prior to each policy renewal.
E. EXISTENCE AND COMPLIANCE. Maintain its existence, good
standing and qualification to do business, where required and the failure to be
so qualified will have a Material Adverse Effect on Borrower 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, where the failure to comply will have a
Material Adverse Effect on Borrower.
F. ADVERSE CONDITIONS OR EVENTS. Promptly advise Lender in
writing of (i) any condition, event or act which comes to its attention that
Borrower reasonably believes is likely to 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 loss of Collateral through fire, theft,
liability or property damage in excess of an aggregate of $500,000.00.
G. TAXES AND OTHER OBLIGATIONS. Pay all of its taxes,
assessments and other obligations where the failure to make such payments will
have a Material Adverse Effect on Borrower, 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.
H. 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
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property), and preserve and maintain all material licenses, trademarks,
privileges, permits, franchises, certificates and the like necessary for the
operation of its business.
I. NOTIFICATION OF ENVIRONMENTAL CLAIMS. Borrower shall
immediately advise Lender 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 which is likely to result in a Material Adverse
Effect; 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 which is likely to result in a
Material Adverse Effect. Borrower shall immediately notify Lender of any
material remedial action taken by Borrower with respect to Borrower's business
operations.
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 Lender (and without limiting any requirement of
any other Loan Documents):
A. OWNERSHIP AND MANAGEMENT. Make or permit to be made any
significant change in Xxxxxxx X. Xxxxxx'x involvement in the management of the
Borrower.
B. TRANSFER OF ASSETS. Sell, lease, sell and leaseback, assign
or otherwise dispose of or transfer all or substantially all of its assets,
except in the normal course of its business.
C. LIENS. Grant, suffer or permit any contractual or
non-contractual lien on or security interest in the Collateral, 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: (1) advances to
employees of the Borrower for expenses incurred in the ordinary course of
business; (2) loans made to Schoeller Xxxxxx Technologies GmbH in accordance
with the terms of the Joint Venture Agreement between Borrower and Schoeller
Textil AG or as approved from time to time by the board of directors of the
Borrower; (3) loans outstanding on the date of this Agreement and listed on
Schedule 7D attached hereto.
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 Lender, except for (1) normal trade debts incurred in the ordinary
course of Borrower's business; (2) existing indebtedness disclosed to Lender on
Schedule 7E(2) attached hereto; (3) indebtedness arising pursuant to purchase
money contracts for assets acquired after the date hereof, provided that (i)
any lien in respect of such indebtedness attaches only to the assets
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purchased, and (ii) the indebtedness is within the ranges set forth on Schedule
7E(3); (4) any indebtedness with respect to a program of factoring accounts
receivable of the Borrower which, by its terms, is secured solely by the
Borrower's accounts receivable; (5) other indebtedness which, by its terms is
expressly subordinated in repayment to the Loan, and the covenants, events of
default and mandatory prepayment provisions of such indebtedness may not be
more restrictive than the corresponding provisions contained in the Loan
Documents and any conversion rights may not be any more favorable than the
conversion rights in the Note; and (6) short-term unsecured indebtedness up to
an aggregate amount outstanding of $250,000 at any one time.
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 in any material respect the
general character of business as conducted at the date hereof.
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 and such default continues for 5
days after written notice thereof. 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
Lender, and such default shall continue uncured for a period of thirty (30)
days following written notice by Lender to Borrower; provided, further, that if
the Borrower has undertaken to cure any such default and is diligently
prosecuting such cure, to the reasonable satisfaction of Lender, it shall not
constitute a default under this Agreement if the subject default remains
uncured beyond thirty (30) days following written notice by Lender to Borrower.
Borrower shall also be in default and all unpaid principal and accrued interest
under the Loan shall become immediately due and payable: (i) if Borrower
commences voluntary proceeding under any provision of Title 11 of the United
States Code, as now or hereafter amended, or commences any other proceeding,
under any law, now or hereafter in force, relating to its own bankruptcy,
insolvency, reorganization, liquidation, or otherwise to the relief of its own
debtors or the readjustment of its own indebtedness; (ii) if Borrower makes any
assignment for the benefit of its own creditors or similar arrangement with its
own such creditors; (iii) if Borrower appoints a receiver, trustee or similar
judicial officer or agent to take charge of or liquidate any of its own
property or assets; (iv) upon the commencement against Borrower of any
involuntary proceeding of the kind described in subsections (i), (ii) and (iii)
herein; (v) any other liquidation, dissolution or winding up of Borrower; (vi)
any consolidation, merger, recapitalization, sale of equity securities or other
transaction pursuant to which the holders of the Borrower's outstanding capital
stock immediately preceding such event own less than 50% of the outstanding
capital stock (on a fully
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diluted basis) of the surviving corporation; or (viii) a sale, lease or other
disposition of all or substantially all of the assets of the Borrower.
9. REMEDIES UPON DEFAULT. If an event of default shall occur,
Lender 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: Xxxx X. Xxxxxxxx
Chief Financial Officer
With a copy to:
Womble, Carlyle, Xxxxxxxxx & Rice, PLLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxx, Esq.
Lender:
MUSI Investments S.A.
231 Val des Bons Malades
X-0000 Xxxxxxxxxx-Xxxxxxxxx
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxx xx Xxxxxxxx Xxxxx-Xxxxxx
00000 Xxxxx, Xxxxxx
Attn: Xxxxx X. Xxxxxxxxx, Esq.
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.
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11. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Lender 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 Lender's in-house counsel), incurred by Lender in connection
with negotiation and preparation of this Agreement and each of the Loan
Documents; provided, however, Borrower's obligation to pay such costs and
expenses shall be limited to 2% of the total amount of the Loan. 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 Lender 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 Lender 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 Lender, and no delay in exercising any right shall operate as a
waiver thereof, nor shall any single or partial exercise by Lender 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 Lender, 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 Lender,
its successors and assigns; however, no assignment or other transfer of
Borrower's rights or obligations hereunder shall be made or be effective
without Lender'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 Lender
shall be in form and content satisfactory to Lender 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. Upon any such
12
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Loan Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Loan Agreement are consummated to the extent possible.
F. INDEMNIFICATION. Borrower shall indemnify, defend and hold
Lender and its successors and assigns in Lender's capacity as a lender under
this Agreement 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 Lender, 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 Lender to make any advances under the
Line of Credit shall not have expired.
H. UPDATED APPRAISALS AND MAINTENANCE OF COLLATERAL VALUE.
Lender may at its option, at Lender's own expense, obtain an appraisal of any
Collateral securing payment of the Loan, which appraisal shall be prepared by a
third-party appraiser engaged directly by Lender.
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
13
DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION, OR ANY SUCCESSOR THEREOF
("A.A.A."), 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 FORSYTH
COUNTY, NORTH CAROLINA AND ADMINISTERED BY A.A.A., WHICH WILL APPOINT AN
ARBITRATOR. 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) LIMIT THE RIGHT OF THE LENDER 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 LENDER 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.
The remainder of this page intentionally left blank
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized representatives as of the date
first above written.
BORROWER:
---------
WITNESS: XXXXXX TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
/s/ Xxxx X. Xxxxxxxx Title: Chairman and CEO
---------------------- ------------------------------
[Corporate Seal]
LENDER:
-------
MUSI INVESTMENTS S.A.
By: /s/ Xxxx Xxxxxxx Antivari
---------------------------------
Name: Xxxx Xxxxxxx Antivari
-------------------------------
Title:
------------------------------
15
15
SCHEDULE 1K
(PERMITTED LIENS)
(1) (a) any lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a subsidiary and not created
in contemplation of such event;
(b) any lien on any specific fixed asset securing debt
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring or constructing such asset, provided that such lien attaches to such
asset concurrently with or within 18 months after the acquisition or completion
of construction thereof;
(c) any lien on any specific fixed asset of any
corporation existing at the time such corporation is merged or consolidated
with or into the Borrower or a subsidiary and not created in contemplation of
such event;
(d) any lien existing on any specific fixed asset prior
to the acquisition thereof by the Borrower or a subsidiary and not created in
contemplation of such acquisition;
(e) any lien arising out of the refinancing, extension,
renewal or refunding of any debt secured by any lien permitted by any of the
foregoing paragraphs provided that (i) such debt is not secured by any
additional assets, and (ii) the amount of such debt secured by any such lien is
not increased; and
(f) liens incidental to the conduct of the Borrower's
business or the ownership of assets which (i) do not secure debt and (ii) do
not in the aggregate materially detract from the value of the Borrower's assets
or materially impair the use thereof in the operation of the Borrower's
business.
SCHEDULE 1K, CONTINUED
(PERMITTED LIENS)
(2) Liens perfected by the following UCC financing statements:
XXXXXX TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
File # Jurisdiction Secured Party
--------------------------------------------------------------------------------
1327822 NC Xxxxxx Xxxxx Leasing Company
000 Xxxxxxxxxx Xx
P.O. Box 9104
216915 Forsyth Co. Xxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
NC DAMAD Holding AG & Bluwat AG.
Forsyth Co.
--------------------------------------------------------------------------------
19980058492 NC First Corp.
0000 XX Xxxx Xx.
000000 Xxxxxxx Xx. Xxxxxxxx, XX 00000-0000
--------------------------------------------------------------------------------
EXTREME COMFORT, INC.
---------------------
--------------------------------------------------------------------------------
File # Jurisdiction Secured Party
--------------------------------------------------------------------------------
NC DAMAD Holding AG & Bluwat AG.
Forsyth Co.
--------------------------------------------------------------------------------
SCHEDULE 5D
(PENDING LITIGATION)
(1) An action filed by Outlast Technologies, Inc. against
Borrower in U.S. District Court, District of Colorado,
alleging patent infringement.
(2) An action filed by Baychar, Inc. against Borrower in a court
in Maine alleging patent infringement.
(3) An action filed by Triangle Research and Development
Corporation of Raleigh, North Carolina ("TRDC") and certain
of its employees and owners alleging breach of contract
violation of federal and state securities laws and unfair and
deceptive trade practices.
(4) An action filed by Ruskin, Moscou, Xxxxx & Faltischek, P.C.,
Uniondale, New York, former counsel to Borrower, to recover
alleged unpaid legal fees.
SCHEDULE 5-G
(TAX MATTERS)
The Borrower has not filed federal income tax returns or
certain state income tax returns provided that to the best of the Borrower's
knowledge, no income taxes are due and payable in connection with such returns.
SCHEDULE 7D
(EXTENSIONS OF CREDIT)
None
SCHEDULE 7E(2)
(EXISTING INDEBTEDNESS)
(1) The Borrower has existing secured revolving credit facilities payable to
DAMAD Holding AG and Bluwat AG in the amounts of $750,000 and $500,000,
respectively, each bearing interest at the rate of prime plus 0.75% per annum;
due date is January 10, 2005.
SCHEDULE 7E(3)
(PURCHASE MONEY DEBT)
(1) The Borrower contemplates the purchase of computer and other office
equipment in an aggregate amount not to exceed $50,000; (2) the Borrower
contemplates the need to finance machinery, fixtures, equipment and other
assets in connection with the acquisition and construction of a microcapsule
manufacturing facility in an aggregate amount which will be approved by the
Board of Directors.
SCHEDULE 8
(FUNDING SCHEDULE)
XXXXXX TECHNOLOGIES, INC.
ESTIMATED FUNDING REQUIREMENTS COVERING
ESTIMATED PAYROLL, RELATED TAXES & BENEFITS
JUNE - NOVEMBER, 2002
June 56,550
July 54,876
August 78,638
September 53,650
October 48,050
November 8,237
--------
Total $300,000
========
