Exhibit 10.14
LOAN AGREEMENT
LOAN AGREEMENT dated as of February 5, 1999 entered into by and between
Energy Research Corporation, a New York corporation having a place of business
at 0 Xxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 ("Lender") and Evercel,
Inc., a Delaware corporation having a place of business in 0 Xxxxx Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxx 00000 ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make available to Borrower
a line of credit in the amount of up to $3,450,000.00 to finance Borrower's
working capital needs;
WHEREAS, Lender is willing to do so, but only on the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and
Lender agree as follows.
1. CERTAIN DEFINITIONS. As used herein the terms set forth on
SCHEDULE I hereto shall have the meanings set forth thereon.
2. THE LOANS.
(a) At any time after the date hereof through the earlier to occur of:
(i) the Termination Date; and (ii) the date eighteen (18) months after the date
hereof (the "Commitment Period"), Lender shall, from time to time, at Borrower's
request, make loan advances to Borrower (the "Loans"), subject to the terms and
conditions contained in this Agreement. Loans advanced hereunder may be repaid
and reborrowed and shall be due and payable as set forth in the Line of Credit
Note. Except in Lender's sole discretion, the aggregate principal amount of
Loans advanced hereunder shall not exceed the lesser of $3,450,000.00 or the
Borrowing Base.
(b) The Loans shall be evidenced by the Line of Credit Note in the
form of EXHIBIT A hereto. The Loans shall bear interest and be payable as set
forth in the Line of Credit Note. Without limitation, in the event the
outstanding principal balance of Loans exceeds, at any time, the lesser of
$3,450,000.00 or the Borrowing Base, Borrower shall immediately repay to the
Lender such excess.
(c) Proceeds of the Loans shall be used by Borrower to finance
Borrower's working capital needs.
(d) Lender shall make the Loans available to Borrower by wire transfer
or otherwise as Borrower requests in its requests for advances (PROVIDED that
Borrower shall reimburse Lender
for any administrative expense (wire transfer fees and the like) incurred by
Lender in connection with such advance methods, except for an advance by bank or
certified check).
(e) Any and all proceeds of the Rights Offering shall be used first to
pay off the First Union Line of Credit and then to satisfy all outstanding
amounts on account of the Loans.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
(and at the time of each Loan hereunder shall be deemed to represent and
warrant) to Lender that:
(a) CORPORATE EXISTENCE. It is a corporation duly organized and
validly existing in good standing under the laws of the state of Delaware and is
duly qualified to do business and is in good standing in every other state in
which such qualification may be necessary by reason of nature or location of
Borrower's assets or operations where the failure so to qualify would have a
material adverse effect on Borrower's business, property or condition (financial
or otherwise).
(b) NAME. Its exact legal name is as set forth in the preamble to this
Agreement and Borrower is not generally known by or using any fictitious or
other name or trade name or style.
(c) POWER AND AUTHORITY. The execution, delivery and performance
hereof are within its corporate powers and have been duly authorized by all
necessary corporate action.
(d) DUE EXECUTION. This Agreement has been duly executed and delivered
by and constitutes a valid and binding agreement of Borrower, enforceable
against it in accordance with its terms, except as the enforceability hereof may
be limited by any applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law.
(e) CHIEF EXECUTIVE OFFICE. Its chief executive office and the office
where it keeps its books and records concerning its assets is that shown in the
preamble to this Agreement.
4. AFFIRMATIVE COVENANTS. Borrower agrees that it will:
(a) INSURANCE. (i) Keep its properties insured against fire and other
hazards (so called "All Risk" coverage) in amounts and with companies
satisfactory to Lender to the same extent and covering such risks as is
customary in the same or a similar business, but in no event in an amount less
than the full insurable value thereof, which policies shall name Lender as loss
payee as its interest may appear, (ii) maintain public liability coverage
against claims for personal injuries or death, and (iii) maintain all worker's
compensation, employment or similar insurance as may be required by applicable
law. Such All Risk property insurance coverage shall provide for a minimum of
twenty (20) days' written cancellation notice to Lender and shall contain a
so-called lender's loss payable endorsement providing that Lender's interest
therein shall not be invalidated by the acts or omissions of any person other
than Lender. Borrower agrees to deliver copies of all of the aforesaid insurance
policies to Lender. In the event of any loss or damage to any of its assets,
including any collateral securing any advance or the Loans, Borrower shall give
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immediate written notice to Lender and to Borrower's insurers of such loss or
damage and shall promptly file proofs of loss with said insurers;
(b) CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. Maintain its corporate
existence in good standing, and its qualification to do business in good
standing in every state in which such qualification is necessary;
(c) TAXES. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or property including
without limitation taxes, assessments, charges or levies relating to real and
personal property, franchises, income, unemployment, old age benefits,
withholding, or sales or use, prior to the date on which penalties attach
thereto, and all lawful claims (whether for any of the foregoing or otherwise)
which, if unpaid, might give rise to a lien upon any property of Borrower,
except any of the foregoing which is being contested in good faith and by
appropriate proceedings, for which Borrower has established and is maintaining
adequate reserves, and as to which no lien having priority over Lender's liens
arises.
(d) CHANGE OF ADDRESS, NAME; LOCATION. Borrower will notify Lender, at
least thirty (30) days prior to any such event, of any change in Borrower's
exact legal name, any change in its place of business or location as set forth
in the preamble to this Agreement, or its establishment of any new place of
business or location.
5. EVENTS OF DEFAULT; REMEDIES.
Upon the occurrence and during the continuance of an Event of Default
(as defined on Schedule I hereto), (a) the Borrower shall have no further right
to request any Loans hereunder, (b) the Loans shall bear interest at the Default
Rate of Interest, as defined in the Line of Credit Note, (c) the Lender may by
notice to Borrower accelerate the payment of the Loans and all other obligations
of Borrower hereunder and demand payment thereof; and (d) Lender may proceed to
enforce payment of any of the foregoing and shall have and may exercise any and
all rights under the Uniform Commercial Code or which are afforded to Lender
herein, in the Security Agreement and other collateral documents executed in
connection herewith, or otherwise.
6. EXPENSES. Borrower agrees to pay Lender on demand any and all
reasonable out-of-pocket costs and expenses of any nature (including without
limitation reasonable attorneys' fees and disbursements) which may be incurred
by Lender in connection with exercise of Lender's rights against the Borrower
after an Event of Default; any exercise of Lender's right of acceleration; any
enforcement, collection or other proceedings with respect to the Loans; or any
bankruptcy, insolvency or other similar proceedings of the Borrower.
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7. CONDITIONS PRECEDENT.
Borrower acknowledges and agrees that Lender will not make any Loans
hereunder, nor will Lender entertain any request from Borrower for Loans
hereunder, unless and until all of the following conditions have been satisfied
and remain satisfied (whether as of the Closing Date or on any subsequent date
when Borrower requests a Loan):
(a) REPRESENTATIONS AND WARRANTIES. Borrower's representations and
warranties contained herein shall be correct and complete in all material
respects;
(b) COVENANTS. Borrower shall be in compliance in all material
respects with all covenants and agreements contained herein;
(c) NO EVENTS OF DEFAULT. There shall exist no Event of Default or any
event which, with the passage of time or the giving of notice or both, would
constitute an Event of Default;
(d) DELIVERY OF DOCUMENTS. Borrower shall have delivered, or caused to
be delivered, to Lender the documents listed on SCHEDULE II, duly executed by
the Borrower, and in form and substance reasonably satisfactory to Lender;
(e) PERFECTION OF SECURITY INTERESTS. Borrower shall have taken, or
caused to be taken, all action that Lender requests in order to create and
perfect Lender's Liens in the Collateral in all jurisdictions designated by
Lender;
(f) FIRST UNION LINE OF CREDIT. The Borrower must first have drawn
down the full amount available to it under the First Union Line of Credit and
any other available credit facilities; and
(g) FUNDS ARE NECESSARY. Lender is satisfied, in its sole discretion,
that Borrower needs the proceeds of the Loan to fund Borrower's working capital
needs.
8. MISCELLANEOUS PROVISIONS.
(a) NOTICES. Unless otherwise specified herein, all other notices
hereunder shall be in writing directed to the addresses shown at the end of this
Agreement. Written notices and communications shall be effective and shall be
deemed received on the day when delivered by hand or by facsimile transmission;
on the next business day, if by commercial overnight courier; and on the third
business day, if by registered or certified mail, postage prepaid.
(b) NO WAIVER. No failure to exercise and no delay in exercising, on
the part of Lender, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or remedy. Waiver by
Lender of any right or remedy on any one occasion shall not be construed as a
bar to or waiver thereof or of any other right or remedy on any future occasion.
Lender's rights and remedies hereunder, under any agreement or instrument
supplemental hereto
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or under any other agreement or instrument shall be cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies provided
by law.
(c) ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of Borrower and Lender and their respective successors and
assigns; PROVIDED THAT Borrower may not assign or transfer any rights or
obligations hereunder without Lender's prior written consent.
(d) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
the laws of the State of Connecticut (other than its laws relating to conflicts
of laws).
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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[SIGNATURE PAGE TO LOAN AGREEMENT]
Executed as an instrument under seal on the date set forth above.
EVERCEL, INC.
By:
----------------------------
Name:
Title:
ADDRESS:
0 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
ENERGY RESEARCH CORPORATION
By:
----------------------------
Name:
Title:
ADDRESS:
0 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
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EXHIBIT A
[LINE OF CREDIT NOTE]
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SCHEDULE I
DEFINITIONS
"BORROWING BASE" means $3,450,000.00 minus the sum of: (i) outstanding advances
under the First Union Line of Credit; (ii) any amounts Lender has paid on
account of the Lease Guaranty; (iii) the net proceeds received on account of any
sale or issuance of any equity securities by Borrower, including under the
Rights Offering; and (iv) the amount of any loans (excluding the First Union
Line of Credit) obtained by Borrower after the date of this Agreement, whether
for general working capital needs or to finance the acquisition of equipment or
other fixed assets, including the present value of Borrower's lease obligations
under the leases which are or should be, under generally accepted accounting
principles, recorded as leases.
"EVENT OF DEFAULT" means any one or more of the following events:
(a) failure by Borrower to pay any principal, interest or other amount
due hereunder or on account of the Loans, within five (5) days of the date
when due;
(b) failure by Borrower to perform or discharge, observe or comply with
any of its covenants or agreements set forth herein or in the Line of Credit
Note and any Security Agreement execution in connection herewith;
(c) any representation, warranty of Borrower to Lender set forth herein
is found to have been false or misleading in any material respect as of the
time when made;
(d) Borrower's liquidation, termination, dissolution or ceasing to
carry on any substantial part of its current business;
(e) commencement by Borrower of a voluntary proceeding seeking relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law, or seeking appointment of a trustee, receiver, liquidator
or other similar official for it or any substantial part of its assets; or
its consent to any of the foregoing in an involuntary proceeding against it;
or Borrower shall generally not be paying its debts as they become due or
admit in writing its inability to do so; or an assignment for the benefit
of, or the offering to or entering into by Borrower of any composition,
extension, reorganization or other agreement or arrangement with, its
creditors; or
(f) commencement of an involuntary proceeding against Borrower seeking
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law, or seeking appointment of a trustee, receiver, liquidator
or other similar official for it or any substantial part of its assets,
which proceeding is not dismissed or stayed within sixty (60) days.
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"FIRST UNION LINE OF CREDIT" means the line of credit provided to Borrower by
First Union providing for loans up to $1,000,000 (with the right to increase
such amount to $2,000,000), scheduled to terminate on or about June 30, 1999.
"LEASE GUARANTY" means the guaranty of lease, dated January 15, 1999, Lender has
provided to Shelter Xxx, LLC, in connection with a lease between Borrower and
Shelter Xxx, LLC.
"LINE OF CREDIT NOTE" means the note executed and delivered by Borrower to
Lender in the form of Exhibit A hereof, made to evidence the Loans.
"LOAN" or "LOANS" has the meaning given in Section 2(a) hereof.
"RIGHTS OFFERING" means Borrower's Rights Offering as reflected in the Form SB-2
Registration Statement under the Securities Act of 1933 filed with the
Securities and Exchange Commission on or about September 30, 1998.
"TERMINATION DATE" means the date on which Borrower has received net proceeds
from items (iii) and (iv) above in the definition of Borrowing Base equal to at
least $3,450,000.00.
Capitalized terms not defined herein shall have the meaning given to such term
in the related agreements and documents executed in connection herewith.
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SCHEDULE II
CLOSING AGENDA
$3,450,000.00 Line of Credit Loan
from Energy Research Corporation
to Evercel, Inc.
Closing Date: February __, 1999
RESPONSIBLE
DOCUMENT PARTY
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1. Loan Agreement BRF&G
2. Line of Credit Note BRF&G
3. Security Agreement BRF&G
4. Patent Collateral Assignment and Security Agreement BRF&G
5. Trademark Collateral Assignment and Security Agreement BRF&G
6. UCC financing statements BRF&G
7. Casualty and Liability Insurance Certificates, showing Lender as
loss payee and additional insured Borrower
8. Authorizing Resolutions:
(a) Energy Research Corporation
(b) Evercel, Inc.
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