Exhibit 10.1
LOAN AGREEMENT
April 12, 2002
This Loan Agreement (the "Agreement") is by and between First Bank & Trust East
Texas (the "Bank"), a state chartered banking association, and Texas Timberjack,
Inc., a Texas corporation (the "Borrower")
ARTICLE 1
AMOUNT AND TERMS OF LOAN
Revolving Line of Credit Loan - From the date of this letter agreement (the
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"Agreement") to April 12, 2003, the Bank agrees to make loans to the Borrower
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from time to time on any date the Bank is officially open for business in such
amounts as the Borrower may request up to the maximum amount hereinafter stated,
and the Borrower may make borrowings and re-borrowing; provided however, that
the sum of the aggregate principal amount of all such loans at any one time
outstanding shall never exceed the lesser of $5,000,000.00 or, the Bank's legal
lending limit, or the Borrowing Base ("Borrowing Base"). The Line is subject to
the Borrowing Base Agreement attached hereto as Exhibit "A" and by reference
made a part hereof. The proceeds of the Line of Credit loans shall be used to
support working capital needs of the Borrower's business. To evidence such loans
the Borrower will execute and deliver to the Bank a promissory note,
substantially in the form of Exhibit "B" (together with any renewals,
modifications or substitutions thereof, the "Line of Credit Note") dated
April 12, 2002 in the amount of $5,000,000.00 and payable to the order of the
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Bank on or before April 12, 2003. Each advance extended under the Line of Credit
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shall bear interest at the Prime Rate plus 1/2 %. The "Prime Rate" shall mean
that rate as published from time to time in the Wall Street Journal.
Without notice to the Borrower or any other person the Prime Rate may change
automatically from time to time as and in amount by which said Prime Rate may
fluctuate, with each such change to be effective as of the date of each change
in said Prime Rate. Interest shall be payable monthly commencing May 12, 2002 to
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maturity on April 12, 2003 when all accrued and unpaid interest and outstanding
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principal shall be paid in full.
ARTICLE 2
SECURITY FOR LOANS
The Line of Credit loans shall be secured by senior security interests in all
accounts receivable, parts inventory, sales contracts receivable, and notes
receivable, of the Borrower. The Borrower shall execute instruments together
with UCC financing statements which are satisfactory to the Bank (collectively,
the "Security Agreements") to evidence its granting to the Bank the referenced
security interests.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Bank as follows:
A. Good Standing. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of Texas and has the power and
authority to own its property and to carry on its business in each
jurisdiction in which Borrower does business.
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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 laws and regulatory requirements to
which it is subject.
C. Binding Agreement. This Agreement and the other Loan Documents executed
by Borrower constitute valid and legally binding obligations of Borrower,
enforceable in accordance with their terms.
D. Litigation. There is no proceeding involving Borrower pending or, to the
knowledge of Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as disclosed to Bank in
writing and acknowledged by Bank prior to the date of this Agreement.
E. No Conflicting Agreements. There is no charter, bylaw, stock provision,
partnership agreement 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 terms of this Agreement and the other Loan
Documents.
F. Ownership of Assets. Borrower has good title to its assets, and its
assets are free and clear of liens, except those granted to Bank and as
disclosed to Bank in writing prior to the date of this Agreement.
G. Taxes. All taxes and assessments due and payable by Borrower have been
paid or are being contested in good faith by appropriate proceedings and
the Borrower has filed all tax returns which it is required to file.
H. Financial Statements. The financial statements of Borrower heretofore
delivered to Bank have been prepared in accordance with GAAP applied on a
consistent basis throughout the period involved 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 financial condition or
operations since September 30, 2001. All factual information furnished by
Borrower to Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete on the date as of which such
information is delivered to Bank and is not and will not be incomplete by
the omission of any material fact necessary to make such information not
misleading.
I. Place of Business. Borrower's chief executive office is located at:
▇▇▇▇ ▇. ▇▇ ▇▇▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
J. Environmental. The conduct of Borrower's business operations and the
condition of Borrower's property does not and will not violate any federal
laws, rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency, and 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.
ARTICLE 4
AFFIRMATIVE COVENANTS
Until full payment and performance of all obligations of Borrower under the Loan
Documents, Borrower will, unless Bank consents otherwise in writing (and without
limiting any requirement of any other Loan Document):
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A. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's books of account
and other records at such reasonable times and as often as Bank may desire,
and pay the reasonable fees for the foregoing purposes. Unless written
notice of another location is given to Bank, Borrower's books and records
will be located at Borrower's chief executive office set forth above. All
financial statements called for below shall be prepared in form and content
acceptable to Bank and by independent certified public accountants
acceptable to Bank.
1. Furnish to Bank audited financial statements of Borrower
(including a balance sheet and profit and loss statement) for
each fiscal year of Borrower, within 120 days after the close of
each such fiscal year.
2. Furnish to Bank internally prepared financial statements
(including a balance sheet and profit and loss statement) of
Borrower for each quarter of each fiscal year of Borrower, within
45 days after the close of each such period.
3. Make available to Bank copies of all 10-Ks, 10-Qs, and all
other material public filings made by Overhill Corporation with
the Securities and Exchange Commission and with any other state
or federal agency within 30 days after filing with such agency.
4. Maintain a debt-to-equity ratio (total liabilities/total
stockholder's equity) not to exceed one to one at any time.
5. Furnish to Bank a compliance certificate for (and executed by
an authorized representative of) Borrower concurrently with and
dated as of the date of delivery of each of the financial
statements as required in paragraph 2 and 3 above, containing (a)
a certification that the financial statements of even date are
true and correct and that the Borrower is not in default under
the terms of this Agreement, and (b) computations and
conclusions, in such detail as Bank may request, with respect to
compliance with this Agreement and the other Loan Documents.
B. Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transaction.
C. Adverse Conditions or Events. Promptly advise Bank in writing of any
condition, event or act which comes to its attention that would or might
materially adversely affect Borrower's financial condition or operations.
D. Taxes and Other Obligations. Pay all of its taxes, assessments and other
obligations, including, but not limited to taxes, costs or other expenses
arising out of this transaction, as the same become due and payable, except
to the extent the same are being contested in good faith by appropriate
proceedings in a diligent manner.
E. Maintenance. Maintain all of its tangible property in good condition and
repair and make all necessary replacements thereof, and preserve and
maintain all licenses, trademarks, privileges, permits, franchises,
certificates and the like necessary for the operation of its business.
F. Insurance. Maintain casualty and liability insurance with financially
sound insurers on its properties against such risks as is customary with
companies in similar businesses.
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ARTICLE 5
NEGATIVE COVENANTS
The Borrower agrees that from the date hereof and until the full satisfaction of
the obligations under this Agreement and the Line of Credit Note, it shall not,
without prior written consent of Bank, do the following:
a) Any material change in executive management with regard to ▇▇▇▇▇▇
▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇; however the death of either of these two
individuals will not be considered a material management change for
purposes of this agreement.
b) Material change of ownership of Borrower.
c) Borrower shall not in any manner become liable for any indebtedness of
Overhill Corporation or any of its affiliates.
d) Make a distribution of equity.
e) Provide a dividend to any owner of the borrower.
ARTICLE 6
EVENTS OF DEFAULT
An Event of Default shall exist if Borrower fails to pay any amounts owed to
Bank under this Agreement, the Line of Credit Note, the Security Agreements or
related loan documents (collectively, the "Loan Documents") when due, if any
representation made under the Loan Documents is false or misleading, or if
Borrower is at any time out of compliance with any of the Affirmative Covenants
or Negative Covenants outlined in Article 4 and Article 5 above. Upon the
occurrence and continuance of any Event of Default, the Bank may cancel the Line
of Credit and declare all amounts outstanding under the Loan Documents
immediately due and payable thirty days after notice of default is received by
Borrower in writing from lender.
ARTICLE 7
MISCELLANEOUS
Expenses - Borrower will pay all reasonable out-of-pocket losses, costs and
expenses incurred by the Bank in connection with the loans made hereunder, the
enforcement of any provision of this Agreement , the Line of Credit Note or the
collection of any amount due hereunder or thereunder including, but not limited
to, reasonable fees and disbursements of counsel to the Bank incurred in the
course of so enforcing such rights.
No Waiver - No failure or delay by the Bank in exercising any right, power of
remedy hereunder upon a breach of this Agreement shall constitute a waiver of
any such term, condition, agreement, right, power of Bank from exercising any
such rights, power or remedy at any later time or times.
Amendments - The Bank shall not be deemed to have waived any of the terms and
conditions hereof except by a writing signed by an officer of the Bank delivered
to the Borrower. This Agreement may be amended by a supplement agreement setting
forth such amendment when properly executed by all parties to this Agreement.
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GAAP - All account terms used herein shall have the meaning assigned to them by
generally accepted accounting principles unless otherwise defined.
Law Governing - The Agreement and all rights shall be governed by the laws of
the State of Texas and applicable laws of the United States of America and shall
be binding upon the Borrower and all successors and assigns.
FINAL AGREEMENT OF THE PARTIES - THIS WRITTEN AGREEMENT AND THE OTHER LOAN
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DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 16.02 (A) OF THE
TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR
SEBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the date first
above written.
BORROWER: Texas Timberjack, Inc. BANK: First Bank & Trust East Texas
By: By:
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Name: Name:
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Title: Title:
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