EXHIBIT 10.11
AMENDED AND RESTATED LOAN AGREEMENT
July 10, 2000
Avatar Systems, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
This Amended and Restated Loan Agreement (the "Loan Agreement") will
serve to set forth the terms of the financing transactions by and between Avatar
Systems, Inc., a Texas corporation f/k/a Avatar International, Inc. ("Borrower"
), and Bank One, Texas, N.A. ("Bank"). Pursuant to a Loan Agreement dated as of
August 26, 1998 between the Bank and Avatar Systems, Ltd. (the "Partnership").
the Partnership borrowed $520,000 in a single advance from the Bank (the "Prior
Loan"). The Prior Loan has been partially paid, and the current principal amount
owing is S288,888.96. The Partnership has been dissolved and Borrower has
assumed all liabilities of the Partnership (the "Reorganization"). Borrower
guaranteed the Prior Loan and Borrower is executing this Agreement to evidence
Borrower's direct liability on the Prior Loan.
1. Credit Facilities. Subject to the terms and conditions set forth in
this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "Loan Documents"), Bank has made a credit facility or
facilities available to the Partnership and Borrower has assumed those
liabilities (the "Credit Facilities"):
(a) Term Loan. Subject to the terms and conditions set forth
herein, Borrower agrees to pay Bank, the amount of $288,888.96 (the
"Term Loan" or the "Loans").
2. Promissory Notes. The Loans shall be evidenced by one or more
promissory notes (whether one or more, together with any renewals, extensions
and increases thereof, the "Notes") duly executed by Borrower and payable to the
order of Bank, in form and substance acceptable to Bank. Interest on the Notes
shall accrue at the rate set forth therein. The principal of and interest on the
Notes shall be due and payable in accordance with the terms and conditions set
forth in the Notes and in this Loan Agreement.
3. Collateral. As collateral and security for the indebtedness
evidenced by the Notes and any and all other indebtedness or obligations from
time to time owing by Borrower to Bank, Borrower shall grant, and hereby grants,
to Bank, its successors and assigns, a first and prior lien and security
interest in and to the property described in the Security Agreement executed as
of even date herewith by and between Borrower and Bank (the "Security
Agreement").
4. Guarantors. Borrower agrees to cause Xxxxxxx X. Xxxxx, Xxxxxxx
Xxxxxxx Xxxxx and Xxxxxx X. Xxxxxx, Xx. (referred to herein collectively as the
"Guarantors", and each, individually, as a "Guarantor") to each execute and
deliver to Bank contemporaneously herewith a guaranty agreement (each a
"Guaranty"), inform and substance satisfactory to Bank.
1
5. Representations and Warranties. Borrower hereby represents and
warrants to Bank as follows:
(a) Existence. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Texas and all other states where it is doing business, and has all
requisite power and authority to execute and deliver the Loan
Documents.
(b) Binding Obligation. The execution, delivery, and
performance of this Loan Agreement and all of the other Loan Documents
by Borrower have been duly authorized by all necessary action by
Borrower, and constitute legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except
as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
(c) No Consent. The execution, delivery and performance of
this Loan Agreement and the other Loan Documents, and the consummation
of the transactions contemplated hereby and thereby, do not (i)
conflict with, result in a violation of, or constitute a default under
(A) any provision of its certificate or articles of incorporation, or
any agreement or other instrument binding upon Borrower, or (B) any
law, governmental regulation, court decree or order applicable to
Borrower, or (ii) require the consent, approval or authorization of any
third party.
(d) Financial Condition. Each financial statement of Borrower
supplied to the Bank truly discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has
been no material adverse change in such financial condition or results
of operations of Borrower subsequent to the date of the most recent,
financial statement supplied to the Bank.
(e) Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or the properties of Borrower, before any court or
governmental department, commission or board, which, if determined
adversely to Borrower, would have a material adverse effect on the
financial condition, proper-ties, or operations of Borrower.
(f) Taxes, Governmental Charges. Borrower has filed all
federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties
and charges indicated due on the basis of such returns and reports, or
made adequate provision for the payment thereof, and the assessment of
any material amount of additional taxes in excess of those paid and
reported is not reasonably expected.
(g) Year 2000 Compliance. Borrower represents and warrants to
Bank that: (i) as of the date hereof, and (ii) as of the date of any
renewal, extension or modification of the Loan Agreement:
2
(1) All devices, systems, machinery, information
technology, computer software and hardware, and other date
sensitive technology jointly and severally the "Systems")
necessary for Borrower to carry on its business as presently
conducted and as contemplated to be conducted in the future
are Year 2000 Compliant or will be Year 2000 Compliant within
a period of time calculated to result in no material
disruption of any of Borrower's business operations. For
purposes of these provisions, "Year 2000 Compliant" means that
such Systems are designed to be used prior to, during and
after the Gregorian calendar year 2000 A.D. and will operate
during each such time period without error relating to date
data, specifically including any error relating to, or the
product of, date data which represents or references different
centuries or. more than one century.
(2) Borrower has: (A) undertaken a detailed
inventory, review, and assessment of all areas within its
business and operations that could be adversely affected by
the failure of Borrower to be Year 2000 Compliant on a timely
basis; (B) developed a detailed plan and time line for
becoming Year 2000 Compliant on a timely basis; (C) to date,
implemented that plan in accordance with that timetable in all
material respects.
(3) Borrower has made written inquiry of each of its
key suppliers, vendors, and customers, and has obtained in
writing confirmations from all such persons, as to whether
such persons have initiated programs to become Year 2000
Compliant and on the basis of such confirmations. Borrower
reasonably believes that all such persons will be or become so
compliant. For purposes hereof, key suppliers, vendors, and
customers" refers to those suppliers, vendors, and customers
of Borrower whose business failure would, with reasonable
probability, result in a material adverse change in the
business, properties, condition (financial or otherwise), or
prospects of Borrower. For purposes of this paragraph, Bank,
as a lender of funds under the terms of the Loan Agreement,
confirms to Borrower that Bank has initiated its own
corporate-wide Year 2000 program with respect to its lending
activities.
(4) The fair market value of all real and personal
property, if any, pledged to Bank as Collateral to secure the
Term Loan is not and shall not be less than currently
anticipated or subject to deterioration in value because of
the failure of such Collateral to be Year 2000 Compliant.
6. Conditions Precedent to Closing. This Loan Agreement shall be
effective upon the satisfaction of each of the following conditions:
3
(a) Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto.
(b) Reorganization Documents. Borrower shall have delivered to
Bank certified copies of all documents evidencing the Reorganization.
(c) Payment of Fees and Expenses. Borrower shall have paid
Bank a $5,000 closing fee, and shall have reimbursed Bank for, or paid
directly, all fees, costs and expenses incurred by Bank's counsel in
connection with closing of the transactions contemplated hereby.
(d) Opinion. Bank shall have received a legal opinion from
counsel to Borrower, in form and substance acceptable to Bank.
7. Affirmative Covenants. Until the Notes and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, Borrower agrees and covenants that it will, unless
Bank shall otherwise consent in writing:
(a) Accounts and Records. Maintain its books and records in
accordance with generally accepted accounting principles.
(b) Right of Inspection. Permit Bank to visit its properties
and installations and to examine, audit and make and take away copies
or reproductions of Borrower's books and records, at all reasonable
times.
(c) Right to Additional Information. Furnish Bank with such
additional information and statements, lists of assets and liabilities,
tax returns, and other reports with respect to Borrower's financial
condition and business operations as Bank may request from time to
time.
(d) Compliance with Laws. Conduct its business in an orderly
and efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations and/or
ordinances imposed by any governmental unit upon Borrower its
businesses, operations and properties (including without limitation,
all applicable environmental statutes, rules, regulations and
ordinances).
(e) Taxes. Pay and discharge when due all of its indebtedness
and obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided, however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, xxxx,
xxxx or claim so long as (i) the legality of the same shall be
contested in good faith by appropriate judicial, administrative or
other legal proceedings, and (ii) Borrower shall have established on
its books adequate reserves with respect to such contested assessment,
tax, charge, xxxx, xxxx or claim in accordance with generally accepted
accounting principles, consistently applied.
4
(f) Insurance. Maintain insurance, including but not limited
to, fire insurance, comprehensive property damage, public liability,
worker's compensation, business interruption and other insurance deemed
necessary or otherwise required by Bank.
(g) Notice of Indebtedness. Promptly inform Bank of the
creation, incurrence or assumption by Borrower of any actual or
contingent liabilities not permitted under this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement
thereof, notify Bank of all actions, suits and proceedings before any
court or any governmental department. commission or board affecting
Borrower or any of its properties.
(i) Notice of Material Adverse Change. Promptly inform Bank of
(i) any and all material adverse changes in Borrower's financial
condition, and (ii) all claims made against Borrower which could
materially affect the financial condition of Borrower.
(j) Year 2000 Compatibility. Borrower covenants and agrees
with Bank that, while any Loan is in effect, Borrower will: (i) furnish
such additional information, statements and other reports with respect
to Borrower's activities, course of action and progress towards
becoming Year 2000 Compliant as Bank may request from time to time; and
(ii) in the event of any change in circumstances that causes or will
likely cause any of Borrower's representations and warranties with
respect to its being or becoming Year 2000 Compliant to no longer be
true (hereinafter, referred to as a "Change in Circumstances") then
Borrower shall promptly, and in any event within ten (10) days of
receipt of information regarding a Change in Circumstances, provide
Bank with written notice (the "Notice") that describes in reasonable
detail the Change in Circumstances and how such change in Circumstances
caused or will likely cause Borrower's representations and warranties
with respect to being or becoming Year 2000 Compliant no longer to be
true. Borrower shall, within ten (10) days of a request, also provide
Bank with any additional information Bank requests of Borrower in
connection with the Notice and/or a Change in Circumstances-, and
promptly upon its becoming available, furnish to Bank one copy of each
financial statement, report, notice or proxy statement sent by Borrower
to stockholders generally and of each regular or periodic report,
registration statement or prospectus filed by Borrower with any
securities exchange or the Securities and Exchange Commission or any
successor agency, and of any order issued by any governmental Authority
in any proceeding to which Borrower is a party. For purposes of the
provisions, "Governmental Authority" shall mean any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency
or other governmental entity having or asserting jurisdiction over
Borrower or any of its business, operations or properties. Further,
Borrower shall give any representative of Bank access during all
business hours to, -and permit such representative to examine, copy or
make excerpts from, any and all books, records and documents in the
possession of Borrower and relating to its affairs, and to inspect any
of -the properties and Systems of Borrower, and to project test the
Systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of Bank.
5
(k) Additional Documentation. Execute and deliver, or cause to
be executed and delivered, any and all other agreements, instruments or
documents which Bank may reasonably request in order to give effect to
the transactions contemplated under this Loan Agreement and the other
Loan Documents.
8. Negative Covenants. Until the Notes and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, Borrower will not, without the prior written
consent of Bank:
(a) Nature of Business. Make any material change in the nature
of its business as carried on as of the date hereof.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any
of its assets or properties, other than in the ordinary course of
business.
(d) Liens. Create, incur or assume any lien or encumbrance on
any of its assets or properties. including without limitations, the
Collateral; provided, however, that Borrower shall be permitted to
create purchase money liens up to an aggregate amount of $50,000
("Permitted Purchase Money Liens").
(e) Indebtedness. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or
other evidences of indebtedness, or guarantee any such indebtedness or
such evidences of indebtedness of others, other than (i) borrowings
from Bank, (ii) indebtedness secured by Permitted Purchase Money Liens,
and (iii) borrowings outstanding on the date hereof and disclosed in
writing to Bank.
(f) Transfer of Ownership. Permit the sale or other transfer
of any ownership interest in Borrower if, as a result of any such sale
or transfer, Xxxxxxx T, Xxxxx and Xxxxxxx Xxxxxxx Xxxxx collectively
cease to own at least fifty-one percent (5 1 %) of the ownership
interest in Borrower.
(g) Change in Management/Change in Articles of Incorporation.
Permit a change in the senior management of Borrower, permit Xxxxxx X.
Xxxxxx, Xx. to cease serving as President of Avatar Systems, Inc. or
pen-nit any amendment, restatement or other modification to Borrower's
articles of incorporation.
(h) Loans and Investments. The Borrower will not make any
advance, loan, extension of credit, or capital contribution to or
investment in, or purchase, any stock, bonds, notes, debentures, or
other securities of, any person or entity, except:
(i) readily marketable direct obligations of the
United States of America or any agency thereof with maturities
of one year or less from the date of acquisition; and
6
(ii) fully insured certificates of deposit with
maturities of one year or less from the date of acquisition
issued by Bank.
(i) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate (as
hereinafter defined) of Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon
fair and reasonable terms no less favorable to Borrower than would be
obtained in a comparable arm's-length transaction with a person or
entity not an Affiliate of Borrower. As used herein, the term
"Affiliate" means any individual or entity directly or indirectly
controlling, controlled by, or under common control with, another
individual or entity.
(j) Distributions. Make any distributions to any shareholder,
or make any other distributions with respect to any payment on account
of the purchase, redemption, or other acquisition or retirement of any
ownership interest of Borrower, or make any other distribution, sale,
transfer or lease of any of Borrower's assets other than in the
ordinary course of business, unless any such amounts are directly
utilized for the payment of principal or interest on indebtedness and
obligations owing from time to time by Borrower to Bank.
9. Intentionally Deleted.
10. Reporting Requirements. Until the Notes and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, Borrower will, unless Bank shall
otherwise consent in writing, furnish to Bank:
(a) Annual Financial Statements. As soon as available and in
any event within ninety (90) days after the end of each fiscal year of
Borrower, a balance sheet and income statement of Borrower as of the
end of such fiscal year, in each case in form and substance and in
reasonable detail satisfactory to Bank and duly certified by the chief
financial officer of Borrower (i) as being true and correct in all
material respects to the best of his or her knowledge and (ii) as
having been prepared in accordance with generally accepted accounting
principles, consistently applied. In addition to the above, each such
annual financial statement shall include sufficient financial
information to demonstrate, and a certification by the chief financial
officer of Borrower, that as of the date of such statement, Borrower
has not breached any financial covenant set forth in Section 9 of this
Agreement.
(b) Quarterly Financial Statement. As soon as available, and
in any event within sixty (60) days after the end of each fiscal
quarter of Borrower, a balance sheet and income statement of Borrower
as of the end of such fiscal quarter, in each case in form and
substance and in reasonable detail satisfactory to Bank and duly
certified (subject to year-end review adjustments) by the chief
financial officer of Borrower (i) as being true and correct in all
material aspects to the best of his or her knowledge, and (ii) as
having been prepared in accordance with generally accepted accounting
principles, consistently applied. In addition to the above, each such
quarterly financial statement shall include sufficient information to
demonstrate, and a certification by the chief financial officer of
Borrower, that as of the date of such statement, Borrower has not
breached any financial covenant set forth in Section 9 of this
Agreement. In addition to the above, Borrower shall deliver (together
with the quarterly financial statements) a listing and detailed report
in form acceptable to Bank of all accounts receivable of Borrower as of
the last day of each fiscal quarter, and the period of time which has
elapsed with respect to such accounts receivable since the original
invoice date with respect thereto.
7
(c) Borrower's Tax Returns. Borrower shall provide to Bank
copies of Borrower's federal income tax returns within fifteen (15)
days following the filing thereof with the Internal Revenue Service and
in any event no less frequently than annually.
(d) Guarantor's Financial Statement. As soon as available and
in any event within (i) ninety (90) days after the end of each calendar
year, or other period as otherwise required by a Guaranty, annual
financial statements (balance sheet, cash flow statement and statement
of contingent liabilities) of each Guarantor as of the end of such
calendar year, and (ii) thirty (30) days after the date of this Loan
Agreement, financial statements of Xxxxxxx X. Xxxxx and Xxxxxxx Xxxxxxx
Xxxxx as of January 1, 2000.
(e) Liabilities. As soon as incurred or known, information of
any material actual or contingent liability of Borrower.
11. Events of Default. Each of the following shall constitute an "Event
of Default" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower to pay when
due any part of the principal of, or interest on, the Notes or any
other indebtedness or obligations owing to Bank by Borrower from time
to time.
(b) The failure of Borrower or any Obligated Party (as defined
below) to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other
Loan Documents.
(c) The occurrence of an event of default under any of the
other Loan Documents or under any other agreement now existing or
hereafter arising between Bank and Borrower.
(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower or any Obligated Party is false or
misleading in any material respect.
(e) The occurrence of any event which permits the acceleration
of the maturity of any indebtedness owing by Borrower to any third
party under any agreement or understanding.
(f) If Borrower or any Obligated Party: (i) becomes insolvent,
or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due; (ii) generally is not paying its debts as
such debts become due; (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of the
assets of such party, either in a proceeding brought by such party or
in a proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days
after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) -files a petition
for relief under the United States Bankruptcy Code or any other present
or future federal or state insolvency, bankruptcy or similar laws (all
of the foregoing hereinafter collectively called "Applicable Bankruptcy
Law") or an involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within sixty (60) days after the filing thereof, or an
order for relief naming such party is entered under any Applicable
Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged
within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to
pay within thirty (30)days any final money judgment against such party.
8
(g) If Borrower or any Obligated Party is an entity, the
liquidation, dissolution, merger or consolidation of any such entity
or, if Borrower or any Obligated Party is an individual, the death or
legal incapacity of any such individual.
(h) The entry of any judgment against Borrower or the issuance
or entry of any attachment or other lien against any of the property of
Borrower for an amount in ' excess of 10,000, if undischarged, unbonded
or undismissed within thirty (30) days after such entry.
(i) The failure of Guarantors to cash collateralize the Loans
as requested by Bank pursuant to any Guaranty.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative. The term "Obligated Party", as used herein, shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Notes.
12. Remedies/Late Charge Penalties. Upon the occurrence of any one or
more of the foregoing Events of Default, (a) the entire unpaid balance of
principal of the Notes, together with all accrued but unpaid interest thereon,
and all other indebtedness owing to Bank by Borrower at such time shall, at the
option of Bank, become immediately due and payable without further notice,
demand, presentation, notice of dishonor, notice of intent to accelerate, notice
of acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower, and (b) Bank may, at its option, cease further
advances under any of the Notes; provided, however, concurrently and
automatically with the occurrence of an Event of Default under subparagraph (f)
in the immediately preceding paragraph (i) further advances under the Notes
shall cease, and (ii) the Notes and all other indebtedness owing to Bank by
Borrower at such time shall, without any action by Bank, become due and payable,
without further notice, demand, presentation, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest or notice of protest of
any kind, all of which are expressly waived by Borrower. All rights and remedies
of Bank set forth in this Loan Agreement and in any of the other Loan Documents
may also be exercised by Bank, at its option to be exercised in its sole
discretion, upon the occurrence of an Event of Default.
9
In the event that any amount due from Borrower to Bank under this Agreement or
under the Notes remains unpaid for a period of ten days or more, then Bank shall
be entitled to a late charge penalty for each such incident in an amount equal
to the greater of (a) five percent (5%) of the amount due, or (b) $25.00;
provided, however, that the late charge penalty for each such incident shall not
exceed $1,500.
13. Rights Cumulative. All rights of Bank under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Bank under
any and all other agreements between Borrower and Bank (including, but not
limited to, the other Loan Documents), and not in substitution or diminution of
any rights now or hereafter held by Bank under the terms of any other agreement,
14. Waiver and Agreement. Neither the failure nor any delay on the part
of Bank to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Bank, and then shall be effective only in
the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
15. Benefits. This Loan Agreement shall be binding upon and inure to
the benefit of Bank and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Bank, assign any rights, powers, duties or obligations under this Loan Agreement
or any of the other Loan Documents.
16. Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid.. registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the signature page hereof and shall be deemed to have been
received either, in the case of expedited delivery service, as of the date of
first attempted delivery at the address and in the manner provided herein, or in
the case of mail, upon deposit in a depository receptacle under the care and
custody of the United States Postal Service. Either party shall have the right
to change its address for notice hereunder to any other location within the
continental United States by notice to the other party of such new address at
least thirty (30) days prior to the effective date of such new address.
17. Construction. This Loan Agreement and the other Loan Documents have
been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Bank's
address set forth on the signature page hereof is located.
10
18. Invalid Provisions. If any provision of this Loan Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
19. Expenses. Borrower shall pay all costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with (i) any
action required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, and (ii) any action in the
enforcement of Bank's rights upon the occurrence of an Event of Default.
20. Participation of the Loans. Borrower agrees that Bank may, at its
option, sell interests in the Loans and its rights under this Loan Agreement to
a financial institution or institutions and, in connection with each such sale,
Bank may disclose any financial and other information available to Bank
concerning Borrower to each perspective purchaser.
21. Entire Agreement. This Loan Agreement (together with the other Loan
Documents) contains the entire agreement among the parties regarding the subject
matter hereof and supersedes all prior written and oral agreements and
understandings among the parties hereto regarding same.
22. Conflicts. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.
23. Counterparts. This Loan Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
11
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
Very truly yours,
BANK ONE, TEXAS, N.A.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Bank's Address:
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
ACCEPTED as of the date first written above.
AVATAR SYSTEMS, INC. Borrower's Address:
Avatar Systems, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
By: /s/ Xxxxxx X. Xxxxxx, Xx. Xxxxxx, Xxxxx 00000
----------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx. Attn: Xx. Xxxxxx X. Xxxxxx, Xx.
Title: President
12
