Exhibit 10.4
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 13th day of June, 2000,
is made and entered into on the terms and conditions hereinafter set forth, by
and between XxxxxxxxxxxxXxxx.xxx, LLC, a Delaware limited liability company
("Borrower"), and COMMERCE CAPITAL, L.P., a Tennessee limited partnership
("Lender").
RECITALS:
WHEREAS, Borrower has requested that Lender make available to Borrower a
term loan in the original principal amount of Eight Hundred Thousand Dollars
($800,000.00) (the "Loan") on the terms and conditions hereinafter set forth,
and for the purpose(s) hereinafter set forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrower, Borrower
has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements of
Borrower, has agreed to make the Loan upon the terms and conditions hereinafter
set forth.
AGREEMENT:
NOW, THEREFORE. in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE 1
THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the terms and
conditions contained herein, the Lender shall make the Loan to Borrower by wire
transfer in immediately available funds. The Loan shall be evidenced by a
Secured Promissory Note in the original principal amount of Eight Hundred
Thousand Dollars ($800,000), dated as of the date hereof, executed by Borrower
in favor of Lender (the "Note"). The Loan shall be payable in accordance with
the terms of the Note. The Note, this Agreement and any other instruments and
documents executed by Borrower, any guarantor of Borrower, or any shareholder,
member, partner, subsidiary or affiliate of Borrower or of any guarantor of
Borrower (individually, "Affiliate," and collectively, "Affiliates"), now or
hereafter evidencing, securing or in any way related to the indebtedness
evidenced by the Note are herein individually referred to as a "Loan Document"
and collectively referred to as the "Loan Documents." The term "Obligations" as
used herein shall refer to (a) the Loan to be made concurrently or in connection
with this Agreement, as evidenced by the Note, and any renewals or extensions
thereof, (b) the full and prompt payment and performance of any and all other
indebtednesses and other obligations of Borrower to Lender, direct or contingent
(including but not limited to
obligations incurred as indorser, guarantor or surety), however evidenced or
denominated, and however and whenever incurred, including but not limited to
indebtednesses incurred pursuant to any present or future commitment of Lender
to Borrower and (c) all future advances made by Lender for taxes, levies,
insurance and preservation of the Collateral and all attorneys' fees, court
costs and expenses of whatever kind incident to the collection of any of said
indebtedness or other obligations and the enforcement and protection of the
security interest created hereby or by the other Loan Documents.
1.2 Processing Fee. Borrower shall pay Lender a processing fee of
$16,000.00, which shall be paid on the date the Loan is funded.
1.3 Prepayment. Borrower may prepay the indebtedness evidenced by the
Note in whole or in part at any time and from time to time, without penalty or
premium.
1.4 Purposes of Loan and Use of Proceeds. The purpose of the Loan shall
be to provide additional acquisition and working capital to Borrower.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Except to the extent set forth on
the Borrower's Schedule of Exceptions attached hereto, Borrower hereby
represents and warrants to Lender as follows:
(a) Corporate Status. Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware; and has the power to own and operate its properties, to
carry on its business as now conducted and to enter into and to perform
its obligations under this Agreement and the other Loan Documents to which
it is a party. Borrower is duly qualified to do business and is in good
standing in each state in which a failure to be so qualified would have a
material adverse effect on Borrower's financial condition or its ability
to conduct its business in the manner now conducted.
(b) Subsidiaries. Borrower neither owns nor has an interest in,
directly or indirectly, any other corporation, partnership, joint venture
or other business organization ("Subsidiaries").
(c) Authorization. Borrower has full legal right, power and
authority to conduct its business and affairs. Borrower has full legal
right, power and authority to enter into and perform its obligations under
the Loan Documents, without the consent or approval of any other person,
firm, governmental agency or other legal entity. The execution and
delivery of this Agreement, the borrowing hereunder, the execution and
delivery of each Loan Document to which Borrower is a party, and the
performance by Borrower of its obligations thereunder are within the
powers of Borrower and have been duly authorized by all necessary action
properly taken and Borrower has received all necessary governmental
approvals, if any, that are required. The officer(s)
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executing this Agreement, the Note and all of the other Loan Documents to
which Borrower is a party are duly authorized to act on behalf of
Borrower.
(d) Validity and Binding Effect. This Agreement and the other Loan
Documents are the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, subject to
limitations imposed by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally or the application of
general equitable principles.
(e) Capitalization. As of the date hereof, all outstanding
membership interests of Borrower (the "Interests") are set forth on
Schedule 2.1(e) attached hereto. All membership interests of Borrower
which are reserved for issuance upon exercise of the Membership Interest
Purchase Warrant dated as of the date hereof and issued to Lender (the
"Warrant") are set forth on Schedule 2.1(e) attached hereto; provided,
however, that the units of membership interests reserved for issuance upon
exercise of the Warrant may be increased from time to time in accordance
with the term of the Warrant. As of the date hereof, Borrower does not
have outstanding any securities convertible or exchangeable for any of its
membership interests or containing any profit participation features, and
does not have outstanding any rights or options to subscribe for or to
purchase its membership interests, except as set forth on Schedule 2.1(e)
and the Warrant. As of the date hereof, Borrower is not subject to any
obligation (contingent or otherwise) to repurchase, redeem, retire or
otherwise acquire any of its membership interests or any warrants, options
or other rights to acquire its membership interests, except as set forth
in the Warrant or on Schedule 2.1(e). As of the date hereof, all of the
outstanding membership interests of Borrower are validly issued, fully
paid and nonassessable. Except as set forth on Schedule 2.1(e), there are
no statutory or contractual preemptive rights, rights of first refusal,
anti-dilution rights or any similar rights, held by members or option
holders of Borrower, with respect to the issuance of the Warrant or the
issuance of the membership interests upon exercise of the Warrant, and all
such rights have been effectively waived with regard to the issuance of
the Warrant, the exercise of the Warrant and the issuance of the
membership interests upon exercise of the Warrant. Borrower has not
violated any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of its membership interests, and
the offer, sale and issuance of the Warrant hereunder do not require
registration under the Securities Act of 1933, as amended, or any
applicable state securities laws. To the best of Borrower's knowledge,
there are no agreements among Borrower's members with respect to any other
aspect of Borrower's affairs, except as set forth on Schedule 2.1(e).
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(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate and
complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses,
formulas and applications therefor owned by Borrower or used or required
by Borrower in the operation of its business, title to each of which is,
except as set forth in Schedule 2.1(f) hereto, held by Borrower free and
clear of all adverse claims, liens, security agreements, restrictions or
other encumbrances. Except as set forth in Schedule 2.1(f), Borrower owns
or possesses adequate (and will use its best efforts to obtain as
expediently as possible any additional) licenses or other rights to use
all patents, trademarks, trade names, service marks, trade secrets or
other intangible property rights and know-how necessary to entitle
Borrower to conduct its business as presently being conducted. There is no
infringement action, lawsuit, claim or complaint which asserts that
Borrower's operations violate or infringe the rights or the trade names,
trademarks, trademark registrations, service names, service marks or
copyrights of others with respect to any apparatus or method of Borrower
or any adversely held trademarks, trade names, trademark registrations,
service names, service marks or copyrights, and Borrower is not in any way
making use of any confidential information or trade secrets of any person,
except with the consent of such person. Except as set forth in Schedule
2.1(f), Borrower has taken reasonable steps to protect its proprietary
information (except disclosure of source codes pursuant to licensing
agreements) and is the lawful owner of the proprietary information free
and clear of any claim of any third party. As used herein, "proprietary
information" includes without limitation, (i) any computer programming
language, software, hardware, firmware or related documentation,
inventions, technical and nontechnical data related thereto, and (ii)
other documentation, inventions and data related to patterns, plans,
methods, techniques, drawings, finances, customer lists, suppliers,
products, special pricing and cost information, designs, processes,
procedures, formulas, research data owned or used by Borrower or marketing
studies conducted by Borrower, all of which Borrower considers to be
commercially important and competitively sensitive and which generally has
not been disclosed to third parties.
(g) No Conflicts. Consummation of the transactions contemplated
hereby and the performance of the obligations of Borrower under and by
virtue of the Loan Documents do not conflict with, and will not result in
any breach of, or constitute a default or trigger a lien under, any
mortgage, security deed or agreement, deed of trust, lease, bank loan or
credit agreement, corporate charter or bylaws, agreement or certificate of
limited partnership, partnership agreement, license, franchise or any
other instrument or agreement to which Borrower is a party or by which
Borrower or its respective properties may be bound or affected or to which
Borrower has not obtained an effective waiver.
(h) Litigation. There are no actions, suits, arbitrations,
administrative hearings or other proceedings pending, or, to the knowledge
of Borrower, threatened, against or affecting Borrower or
XxxxxxxxxxxxXxxx.xxx, Inc., a Virginia corporation ("NFI") or any of their
respective property or involving the validity or enforceability of
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any of the Loan Documents at law or in equity, or before any governmental
or administrative agency. To Borrower's knowledge, neither Borrower nor
NFI is subject to any order, writ, injunction, decree or demand of any
court or any governmental authority.
(i) Financial Statements. The financial statements of NFI dated
________________ 2000, which are attached hereto as Schedule 2.1(i)(A),
are true and correct in all material respects, have been prepared on the
basis of generally accepted accounting principles consistently applied,
and fairly present the financial condition of NFI as of the date(s)
thereof. No material adverse change has occurred in the financial
condition of Borrower or NFI, considered on a consolidated basis, since
the date(s) thereof, and no additional borrowings have been made by
Borrower or NFI since the date(s) thereof other than as set forth on
Schedule 2.1(i)(B).
(j) Conveyance of NFI Assets. As of the Closing Date, NFI shall have
conveyed to Borrower substantially all of the assets owned by NFI,
including without limitation equipment, inventory, computer software,
know-how, trademarks and trade names, and other intangible assets, and has
assigned to Borrower all leases, licenses, contracts and other rights to
possess or use assets owned by third parties. Borrower owns or has a valid
right to use and/or possess all tangible and intangible assets necessary
for it to conduct the business previously conducted by NFI.
(k) Other Agreements; No Defaults. Neither Borrower nor NFI is a
party to any indenture, loan or credit agreement, lease or other agreement
or instrument, or subject to any charter or corporate restriction, or any
restriction in its articles of incorporation, bylaws, certificate of
formation or operating agreement that could have a material adverse effect
on the business, properties, assets, operations or conditions, financial
or otherwise of Borrower or NFI, or the ability of Borrower or NFI to
carry out their obligations under the Loan Documents to which they are a
party. Neither Borrower nor NFI is in default in any respect in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material
to their businesses to which it is a party, including but not limited to
this Agreement and the other Loan Documents, and no other default or event
has occurred and is continuing that with notice or the passage of time or
both would constitute a default or event of default under any of same.
(l) Compliance With Law. Borrower has obtained all necessary
licenses, permits and approvals and authorizations necessary or required
in order to conduct its business and affairs as heretofore conducted and
as hereafter intended to be conducted. Borrower is in compliance with all
laws, regulations, decrees and orders applicable to it (including but not
limited to laws, regulations, decrees and orders relating to
environmental, occupational and health standards and controls, antitrust,
monopoly, restraint of trade or unfair competition), except to the extent
that any noncompliance, in the aggregate, cannot reasonably be expected to
have a material adverse effect on its business, operations, property or
financial condition and will not materially adversely affect Borrower's
ability to perform its obligations under the Loan Documents.
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(m) Debt. Schedule 2.1(m) is a complete and correct list of all
credit agreements, indentures, purchase agreements, promissory notes and
other evidences of indebtedness, guaranties, capital leases and other
instruments, agreements and arrangements presently in effect providing for
or relating to extensions of credit (including agreements and arrangements
for the issuance of letters of credit or for acceptance financing) in
respect of which the Borrower, NFI or any of their properties is in any
manner directly or contingently obligated and the maximum principal or
face amounts of the credit in question that are outstanding and that can
be outstanding are correctly stated, and all liens of any nature given or
agreed to be given as security therefor are correctly described or
indicated in Schedule 2.1(l).
(n) Taxes. NFI has filed or caused to be filed all tax returns that
are required to be filed (except for returns that have been appropriately
extended), and has paid, or will pay when due, all taxes shown to be due
and payable on said returns and all other taxes, impositions, assessments,
fees or other charges imposed on it by any governmental authority, agency
or instrumentality, prior to any delinquency with respect thereto (other
than taxes, impositions, assessments, fees and charges currently being
contested in good faith by appropriate proceedings, for which appropriate
amounts have been reserved). No tax liens have been filed against NFI or
any of its property. Borrower is newly organized and has not yet been
required to file any tax return.
(o) Certain Transactions. Except as set forth on Schedule 2.1(o)
hereto, neither Borrower nor NFI is indebted, directly or indirectly, to
any of its members, managers, shareholders, officers or directors or to
their respective spouses or children, in any amount whatsoever, and none
of said members, managers, shareholders, officers or directors or any
members of their immediate families, are indebted to Borrower or NFI or
have any direct or indirect ownership interest in any firm or corporation
with which Borrower or NFI has a business relationship, or any firm or
corporation which competes with Borrower or NFI, except that members,
managers, shareholders, officers and/or directors of Borrower or NFI may
own no more than 4.9% of outstanding stock of publicly traded companies
which may compete with Borrower or NFI. No member, manager, shareholders,
officer or director of Borrower or NFI or any member of their immediate
families, is, directly or indirectly, interested in any material contract
with Borrower or NFI. Neither Borrower nor NFI is a guarantor or
indemnitor of any indebtedness of any other person, firm, corporation or
other legal entity.
(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower contained in this
Agreement or any schedule attached hereto or any statement in any
document, certificate or other instrument furnished or to be furnished by
Borrower to Lender pursuant hereto, taken as a whole, contains or will (as
of the time so furnished) contain any untrue statement of a material fact,
or omits or will (as of the time so furnished) omit to state any material
fact which is necessary in order to make the statements contained therein
not misleading.
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(q) Margin Regulations. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock.
No proceeds received pursuant to this Agreement will be used to purchase
or carry any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
(r) Significant Contracts. Schedule 2.1(r) is a complete and correct
list of all contracts, agreements and other documents pursuant to which
Borrower or NFI receives revenues in excess of $25,000 per fiscal year or
has committed to make expenditures in excess of $25,000 per fiscal year.
Each such contract, agreement and other document is in full force and
effect as of the date hereof and Borrower knows of no reason why such
contracts, agreements and other documents would not remain in full force
and effect pursuant to the terms thereof.
(s) Environment. Borrower and NFI have duly complied with, and their
businesses, operations, assets, equipment, property, leaseholds or other
facilities are in compliance with, the provisions of all federal, state
and local environmental, health, and safety laws, codes and ordinances,
and all rules and regulations promulgated thereunder. Borrower and NFI
have been issued and will maintain all required federal, state and local
permits, licenses, certificates and approvals relating to (i) air
emissions; (ii) discharges to surface water or groundwater; (iii) noise
emissions; (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or
wastes (which shall include any and all such materials listed in any
federal, state or local law, code or ordinance and all rules and
regulations promulgated thereunder as hazardous or potentially hazardous);
or (vi) other environmental, health or safety matters. Neither Borrower
nor NFI have received notice of, or knows of, or suspects facts which
might constitute any violations of any federal, state or local
environmental, health or safety laws, codes or ordinances, and any rules
or regulations promulgated thereunder with respect to their businesses,
operations, assets, equipment, property, leaseholds, or other facilities.
To the best knowledge of Borrower and NFI, except in accordance with a
valid governmental permit, license, certificate or approval, there has
been no emission, spill, release or discharge into or upon (i) the air;
(ii) soils, or any improvements located thereon; (iii) surface water or
groundwater; or (iv) the sewer, septic system or waste treatment, storage
or disposal system servicing the premises, of any toxic or hazardous
substances or wastes at or from the premises; and, to the best knowledge
of Borrower and NFI, accordingly the premises of Borrower and NFI are free
of all such toxic or hazardous substances or wastes. To the best knowledge
of Borrower and NFI, there has been no complaint, order, directive, claim,
citation or notice by any governmental authority or any person or entity
with respect to (i) air emissions; (ii) spills, releases or discharges to
soils or improvements located thereon, surface water, groundwater or the
sewer, septic system or waste treatment, storage or disposal systems
servicing the premises; (iii) noise emissions; (iv) solid or liquid waste
disposal; (v) the use, generation, storage, transportation or disposal of
toxic or hazardous substances or waste; or (vi) other environmental,
health or safety matters affecting Borrower, NFI or their
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businesses, operations, assets, equipment, property, leaseholds or other
facilities. To the best knowledge of Borrower and NFI, neither Borrower
nor NFI has any indebtedness, obligation or liability (absolute or
contingent, matured or not matured), with respect to the storage,
treatment, cleanup or disposal of any solid wastes, hazardous wastes or
other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup or
disposal).
(t) Fees/Commissions. Neither Borrower nor NFI have agreed to pay
any finder's fee, commission, origination fee (except for the processing
and commitment fees due pursuant to Section 1.2 hereof and except as set
forth on Schedule 2.1(t) hereto) or other fee or charge to any person or
entity with respect to the Loan and investment transactions contemplated
hereunder.
(u) ERISA. Borrower and NFI are in compliance in all material
respects with all applicable provisions of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2,
1974, 88 Stat. 829, 29 X.X.X.X.xx. 1001 et seq. (1975), as amended form
time to time ("ERISA"). Neither a reportable event nor a prohibited
transaction (as defined in ERISA) has occurred and is continuing with
respect to any pension plan that is subject to the requirements of ERISA
(a "Plan"); no notice of intent to terminate a Plan has been filed nor has
any Plan been terminated; no circumstances exist which constitute grounds
entitling the Pension Benefit Guaranty Corporation (together with any
entity succeeding to any or all of its functions, the "PBGC") to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor
has the PBGC instituted any such proceedings; neither Borrower nor any
commonly controlled entity (as defined in ERISA) has completely or
partially withdrawn from a multiemployer plan (as defined in ERISA);
Borrower and each commonly controlled entity has met its minimum funding
requirements under ERISA with respect to all of its Plans and the present
fair market value of all Plan property exceeds the present value of all
vested benefits under each Plan, as determined on the most recent
valuation date of the Plan and in accordance with the provisions of ERISA
and the regulations thereunder for calculating the potential liability of
Borrower or any commonly controlled entity to the PBGC or the Plan under
Title IV or ERISA; and neither Borrower nor any commonly controlled entity
has incurred any liability to the PBGC under ERISA.
(v) Title to Properties. Borrower and NFI have good, indefeasible
and insurable title to, or valid leasehold interests in, all their real
properties and other assets, free and clear of all liens other than
Permitted Liens (as defined in Section 3.15 hereof).
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(w) Limited Offering of Note and Warrant. Neither Borrower nor
anyone acting on its behalf has offered the Note, the Warrant or any
similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof, with,
any person other than Lender and not more than 35 other institutional
investors. Neither Borrower nor anyone acting on its behalf has taken, or
will take, any action which would subject the issuance or sale of the Note
and Warrant to Section 5 of the Securities Act of 1933, as amended, or the
registration or qualification provisions of the blue sky laws of any state
in which the issuance or sale of the Note and Warrant otherwise would be
required to be registered or qualified.
(x) Registration Rights. Except as described in the Warrant,
Borrower is not under any obligation to register under the Securities Act
of 1933, as amended, or the Trust Indenture Act of 1939, as amended, any
of its presently outstanding securities or any of its securities that may
subsequently be issued.
(y) Employees. Neither Borrower nor NFI has any current labor
problems or disputes which have resulted or Borrower reasonably believes
could be expected to have a material adverse effect on the operations,
properties or financial condition of Borrower or NFI or on their ability
to perform their obligations hereunder.
(z) Issuance Taxes. All taxes imposed on Borrower in connection with
the issuance, sale and delivery of the Note, the Warrant and the
membership interest units issuable upon exercise of the Warrant have been
or will be fully paid, and all laws imposing such taxes have been or will
be fully satisfied by Borrower.
(aa) Solvency. As of the date hereof and giving effect to the making
of the Loan, Borrower (i) has capital reasonably sufficient to carry on
its business and transactions and all business and transactions in which
it is about to engage and is able to pay its debts as they mature, (ii)
owns property having a value, both at fair valuation and at present fair
saleable value, greater than the amount required to pay its probable
liabilities (including contingencies), and (iii) does not believe that it
will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.
(bb) Location of Properties, Places of Business. The only
jurisdictions in which Borrower maintains any tangible personal property
or carries on business are as listed in Schedule 2.1(aa) hereto. All
xxxxxxxx for the supply of goods and services by Borrower are made from,
and require payment to be made to, the chief executive office of the
Borrower.
(cc) Year 2000 Compatibility. Borrower has reviewed its financial
accounting systems and other computer systems for year 2000 compatibility
and has not identified any issues that could have a material adverse
effect on Borrower's business, operations, property or financial
condition.
ARTICLE 3
COVENANTS AND AGREEMENTS
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Borrower covenants and agrees that during the term of this Agreement:
3.1 Payment of Obligations. Borrower shall pay the indebtedness evidenced
by the Note according to the terms thereof, and shall timely pay or perform, as
the case may be, all of the other obligations of Borrower to Lender, direct or
contingent, however evidenced or denominated, and however and whenever incurred,
including but not limited to indebtedness incurred pursuant to any present or
future commitment of Lender to Borrower, together with interest thereon, and any
extensions, modifications, consolidations and/or renewals thereof and any notes
given in payment thereof.
3.2 Financial Statements and Reports. Borrower shall furnish to Lender (a)
as soon as practicable and in any event within ninety (90) days after the end of
each fiscal year of Borrower, an audited balance sheet of Borrower as of the
close of such fiscal year, an audited statement of operations of Borrower as of
the close of such fiscal year and an audited statement of cash flows for
Borrower for such fiscal year, prepared in accordance with generally accepted
accounting principles consistently applied and accompanied by an unqualified
audit report prepared by an independent certified public accountant acceptable
to Lender showing the financial condition of Borrower at the close of such
fiscal year and the results of its operations during such fiscal year and
accompanied by a certificate of the President of Borrower, stating that to the
best of the knowledge of such officer, Borrower has kept, observed, performed
and fulfilled each covenant, term and condition of this Agreement and the other
Loan Documents during the preceding fiscal year and that no Event of Default has
occurred and is continuing (or if an Event of Default has occurred and is
continuing, specifying the nature of same, the period of existence of same and
the action Borrower proposes to take in connection therewith), (b) within thirty
(30) days of the end of each calendar month, a status report indicating the
financial performance of Borrower during such month and the financial position
of Borrower as of the end of such month in the format required by Lender (which
format will be delivered to Borrower on a diskette), (c) within sixty (60) days
of the end of each quarter, a balance sheet of Borrower as of the close of such
quarter and a statement of operations of Borrower as of the close of such
quarter, all in reasonable detail, and prepared substantially in accordance with
generally accepted accounting principles consistently applied (except for the
absence of footnotes and subject to year-end adjustments), and (d) with
reasonable promptness, such other financial data, including without limitation,
accounts receivable agings, as Lender may reasonably request. Without Lender's
prior written consent, Borrower shall not modify or change any accounting
policies or procedures, including Borrower's fiscal year, in effect on the date
hereof.
3.3 Maintenance of Books and Records; Inspection. Borrower shall maintain
its books, accounts and records in accordance with generally accepted accounting
principles consistently applied, and after reasonable notice from Lender permit
Lender, its officers and employees and any professionals designated by Lender in
writing, at Borrower's expense, to visit and inspect any of its properties,
corporate books and financial records, and to discuss its accounts, affairs and
finances with Borrower or the principal officers of Borrower during reasonable
business hours, all at such times as Lender may reasonably request; provided
that no such inspection shall materially interfere with the conduct of
Borrower's business. Notwithstanding anything in this paragraph to the contrary,
except upon the occurrence of an
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Event of Default, Borrower shall not be required to pay the expenses associated
with any such inspection more than once in any calendar year.
3.4 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrower shall maintain, in amounts customary for entities
engaged in comparable business activities, (a) to the extent required by
applicable law, worker's compensation insurance (or maintain a legally
sufficient amount of self insurance against worker's compensation liabilities,
with adequate reserves, under a plan approved by Lender, such approval not to be
unreasonably withheld or delayed), and (b) fire and "all risk" casualty
insurance on its properties against such hazards and in at least such amounts as
are customary in Borrower's business. Borrower will make reasonable efforts to
obtain and maintain public liability insurance in an amount, and at a cost,
deemed reasonable to the Borrower's Board of Managers. At the request of Lender,
Borrower will deliver forthwith a certificate specifying the details of such
insurance in effect.
3.5 Taxes and Assessments. Borrower shall (a) file all tax returns and
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (b) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves in accordance with
generally accepted accounting principles are maintained with respect thereto.
3.6 Existence. Borrower shall maintain its existence and good standing in
the state of its organization, and its qualification to do business and good
standing as a foreign entity in each jurisdiction in which such qualification is
necessary pursuant to applicable law.
3.7 Compliance with Law and Other Agreements. Except where the failure to
do so would not materially adversely affect Borrower's operations, properties,
financial condition or its ability to fulfill its obligations under the Loan
Documents, Borrower shall maintain its business operations and property owned or
used in connection therewith in compliance with (a) all applicable federal,
state and local laws, regulations and ordinances governing such business
operations and the use and ownership of such property, and (b) all agreements,
licenses, franchises, indentures and mortgages to which Borrower is a party or
by which Borrower or any of its properties is bound. Without limiting the
foregoing, Borrower shall pay all of its indebtedness promptly in accordance
with the terms thereof.
3.8 Notice of Default; Perceived Breach. Borrower shall give written
notice to Lender of the occurrence of any default, event of default or Event of
Default under this Agreement or any other Loan Document promptly upon the
occurrence thereof. Borrower agrees to give Lender prompt written notice of any
action or inaction by or on behalf of Lender in connection with this Agreement
or the Obligations that Borrower believes may be actionable against Lender or a
defense to payment of any or all Obligations for any reason,
11
including, but not limited to, commission of a tort or violation of any
contractual duty or duty implied by law.
3.9 Notice of Litigation. Borrower shall give notice, in writing, to
Lender of (a) any actions, suits or proceedings, instituted by any persons
whomsoever against Borrower or affecting any of the assets of Borrower wherein
the amount at issue is in excess of Twenty-Five Thousand and No/100ths Dollars
($25,000.00) and (b) any dispute, not resolved within sixty (60) days of the
commencement thereof, between Borrower on the one hand and any governmental
regulatory body on the other hand, which dispute might materially interfere with
the normal operations of Borrower.
3.10 Conduct of Business. Borrower will continue to engage in a business
of the same general type and manner as conducted by it or NFI prior to the date
of this Agreement.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
Plan that is subject to the requirements of ERISA, then the following warranty
and covenants shall be applicable during such period as any such Plan shall be
in effect: (a) Borrower hereby warrants that no fact that might constitute
grounds for the involuntary termination of the Plan, or for the appointment by
the appropriate United States District Court of a trustee to administer the
Plan, exists at the time of execution of this Agreement; (b) Borrower hereby
covenants that throughout the existence of the Plan, Borrower's contributions
tinder the Plan will meet the minimum funding standards required by ERISA and
Borrower will not institute a distress termination of the Plan; and (c) Borrower
covenants that it will send to Lender a copy of any notice of a reportable event
(as defined in ERISA) required by ERISA to be filed with the Labor Department or
the Pension Benefit Guaranty Corporation, at the time that such notice is so
filed.
3.12 Dividends, Distributions, etc. Except for dividends and distributions
required by Borrower's operating agreement, Borrower shall not, without the
prior written consent of Lender, which consent shall not be unreasonably
withheld, declare or pay any dividend of any kind, in cash or in property, on
any class of the membership interests of Borrower, or purchase, redeem, retire
or otherwise acquire for value any such membership interests, nor make any
distribution of any kind in cash or property in respect thereof, nor make any
return of capital of members, nor make any payments in cash or property in
respect of any options, bonus or similar plan nor grant any preemptive rights
with respect to the membership interests of Borrower.
3.13 Guaranties; Loans; Payment of Debt. Without the prior written consent
of Lender, Borrower shall not guarantee nor be liable in any manner, whether
directly or indirectly, or become contingently liable after the date of this
Agreement in connection with the obligations or indebtedness of any person or
entity whatsoever, except for the endorsement of negotiable instruments payable
to Borrower for deposit or collection in the ordinary course of business.
Without the prior written consent of Lender, Borrower shall not (a) make any
loan, advance or extension of credit to any person other than in the normal
course of its business, or (b) make any payment on any subordinated debt other
than (i) trade payables
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incurred in the ordinary course of Borrower's business and (ii) a note in favor
of One Valley Bank in the amount of $6,519.68 which may be paid in its entirety.
3.14 Debt. Without the prior written consent of Lender, Borrower shall not
create, incur, assume or suffer to exist indebtedness of any description
whatsoever, excluding:
(a) the indebtedness evidenced by the Note;
(b) the endorsement of negotiable instruments payable to
Borrower for deposit or collection in the ordinary course
of business;
(c) trade payables incurred in the ordinary course of business
(each of which, individually, does not exceed $25,000) or
other debts or expenditures permitted in any budget and use of
funds duly approved by the Board of Managers of the Borrower,
(d) the indebtedness listed on Schedule 2.1(m) hereto; and
(e) equipment, furniture, fixtures needed in the normal course
of business including, but not limited to, 200 laptop
computers and printers, one passenger/cargo van, 40 desktop
computers and three copiers.
3.15 No Liens. Without the prior written consent of Lender, Borrower shall
not create, incur, assume or suffer to exist any lien, security interest,
security title, mortgage, deed of trust or other encumbrance upon or with
respect to any of its assets, now owned or hereafter acquired, except the
following permitted liens (the "Permitted Liens"):
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable;
(c) liens on leased equipment granted in connection with the
leasing of such equipment in favor of the lessor of such
equipment;
(d) liens described on Schedule 2.1(m) hereto;
(e) statutory, mechanics', laborers' and materialmen liens
arising in the ordinary course of business for sums not yet
due;
(f) statutory and contractual landlord liens under leases
pursuant to which the Borrower is a lessee and not in
default;
(g) with regard to real property, any and all recorded
restrictions (not including mortgages or security interests),
reservations, covenants, conditions, oil and gas leases,
mineral severances, rights-of-way, building or use
restrictions, prescriptive rights, encroachments, protrusions,
and party walls, and liens for taxes, assessments, and other
governmental charges not yet due.
3.16 Mergers, Consolidations, Acquisitions and Sales. Without the prior
written consent of Lender, Borrower shall not (a) be a party to any merger,
consolidation or corporate reorganization, nor (b) purchase or otherwise acquire
all or substantially all of the assets or stock of, or any partnership,
membership or joint venture interest in, any other person, firm or entity, nor
(c) sell, transfer, convey, or lease all or any substantial part of its assets,
nor (d) create any Subsidiaries nor convey any of its assets to any Subsidiary.
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3.17 Transactions With Affiliates. Borrower shall not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any affiliate, 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
Borrower would obtain in a comparable arm's length transaction with a person not
an affiliate. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
3.18 Employment Contracts. Without the prior written consent of Lender,
Borrower shall not (a) enter into any employment agreement or other written
compensation agreement that has a term of greater than one year with any of
Borrower's executive officers or (b) increase total compensation, without regard
to commissions, paid to the executive officers of Borrower by more than ten
percent (10%) per year; provided, however, that the Company may hire a
controller and/or Chief Financial Officer which shall not constitute an increase
in total base compensation paid to the executive officers for purposes of this
section 3.18.
3.19 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lender immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lender immediately of any hazardous discharge from or affecting
its premises; immediately contain and remove the same, in compliance with and to
the extent required by all applicable laws; promptly pay any fine or penalty
assessed in connection therewith, except to the extent Borrower in good faith
contests any such fine or penalty to the extent Borrower follows all applicable
laws in so doing; permit Lender to inspect the premises, to conduct tests
thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at Lender's request, and at Borrower's expense, provide a report of
a qualified environmental engineer, satisfactory in scope, form, and content to
Lender, and such other and further assurances reasonably satisfactory to Lender
that the condition has been corrected.
3.20 Landlord Consents. Borrower shall use its best efforts to obtain a
Landlord Consent and Subordination of Lien, in a form reasonably satisfactory to
Lender, from each landlord from whom Borrower now or hereafter may lease space.
3.21 Issuance of Membership Interests. Without the prior written consent
of Lender, Borrower shall not issue any membership interests of Borrower or
securities convertible into or exercisable for membership interests of Borrower,
except in conjunction with the Avalon Transaction (as defined in Section
4.1(r)), with the issuance of any membership interests contemplated by Sections
3.3(b) or 3.12 of Borrower's Operating Agreement, or with any employee
membership interest option plan of Borrower. Notwithstanding the foregoing
sentence, Borrower is prohibited from issuing or having outstanding more than
fifteen percent (15%) of its total membership interests under any such employee
option plan.
ARTICLE 4
CONDITIONS TO CLOSING
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4.1 Closing of the Loan. The obligation of Lender to fund the Loan on the
date hereof (the "Closing Date") is subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions:
(a) Borrower shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and conditions
required by this Agreement.
(b) Lender shall have received an opinion of the Borrower's counsel,
XxXxxxx Xxxx, a Professional Corporation, dated the Closing Date, in form
and substance satisfactory to Lender's counsel.
(c) Borrower shall have delivered to Lender a Note executed by
Borrower, in form and substance satisfactory to Lender.
(d) Borrower shall have delivered to Lender a Membership Interest
Purchase Warrant executed by Borrower, in form and substance satisfactory
to Lender, and the related Warrant Valuation Letter executed by Borrower.
(e) Borrower shall have delivered to Lender a Security Agreement and
related UCC-1 Financing Statement(s), executed by Borrower, each of which
is in form and substance satisfactory to Lender.
(f) Borrower shall have delivered to Lender a Pledge and Security
Agreement and related membership interest certificates, if any, membership
interest powers and voting proxies executed by NFI and Xxxxxxx X. Xxxxxx,
in form and substance satisfactory to Lender.
(g) Borrower shall have delivered to Lender a Landlord's Consent and
Subordination of Lien, executed by each of Borrower's landlords, in form
and substance satisfactory to Lender.
(h) Borrower shall have delivered to Lender an Assignment of Life
Insurance Policy as Collateral executed by Borrower in duplicate, and a
Life Insurance Assignment Questionnaire executed by Borrower with respect
to an insurance policy insuring the life of Xxxxxxx X. Xxxxxx, in form and
substance satisfactory to Lender, upon issuance of the policy.
(i) Borrower shall have delivered to Lender an Intellectual Property
Security Agreement executed by Borrower, in form and substance
satisfactory to Lender.
(j) Borrower shall have delivered to Lender an Authorization
Agreement for Pre-Authorized Payments (Debit) executed by Borrower, in
form and substance satisfactory to Lender.
15
(k) Borrower shall have delivered to Lender Guaranty Agreements, one
executed by Xxxxxxx X. Xxxxxx and one by NFI, each in form and substance
satisfactory to Lender.
(l) Borrower shall have delivered to Lender copies of the
Certificate of Formation and other publicly filed organizational documents
of Borrower, certified by the Secretary of State or other appropriate
public official in the state of Delaware, and a copy of Borrower's
Operating Agreement.
(m) Borrower shall have delivered to Lender certified (as of the
date of this Agreement) copies of all corporate action taken by Borrower,
including resolutions of its Board of Managers, authorizing the execution,
delivery and performance of the Loan Documents.
(n) Borrower shall have delivered to Lender a certificate as to the
legal existence and good standing of the Borrower, issued by the Secretary
of State or other appropriate public official in the state of Delaware.
(o) Borrower shall have delivered to Lender certificates of the
Secretaries of State or other appropriate public officials as to
Borrower's qualification to do business and good standing in each
jurisdiction in which a failure to be so qualified would have a material
adverse effect on its financial condition or its ability to conduct its
business in the manner now conducted and as hereafter intended to be
conducted.
(p) Borrower shall have delivered to Lender the Small Business
Administration Forms 480, 652 and 1031 (Parts A and B) completed by
Borrower.
(q) Borrower shall have delivered to Lender the Small Business
Administration Economic Impact Assessment completed by Borrower, in form
and substance satisfactory to Lender.
(r) Borrower shall have completed the sale of Membership Interests
to Avalon Equity Fund, L.P., for a total of not less than Two Million One
Hundred Thousand Dollars ($2,100,000) (the "Avalon Transaction"), as
evidenced by the execution of Borrower's Operating Agreement and the
Investment and Membership Interest Subscription Agreement of even date
herewith, a copy of which is attached hereto as Exhibit 4.1(r) (the
"Investment Agreement").
(s) Borrower shall have delivered to Lender evidence reasonably
satisfactory to Lender that (A) NFI has transferred substantially all of
its assets to Borrower and (B) the transactions contemplated by the
Investment Agreement shall have closed or shall close without any
condition other than the passage of time as contemplated by the Investment
Agreement.
ARTICLE 5
DEFAULT AND REMEDIES
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5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default in the payment of the principal of or interest on the
indebtedness evidenced by the Note in accordance with the terms of the
Note, which default is not cured within five (5) days of receipt of
written notice;
(b) Any misrepresentation by Borrower, any guarantor of the Loan, or
any Affiliate as to any material matter hereunder or under any of the
other Loan Documents, or delivery by Borrower of any schedule, statement,
resolution, report, certificate, notice or writing to Lender that is
untrue in any material respect on the date as of which the facts set forth
therein are stated or certified;
(c) Failure of Borrower, any guarantor of the Loan, or any Affiliate
to perform any of its obligations, covenants or agreements under this
Agreement, the Note or any of the other Loan Documents;
(d) Borrower (i) shall generally not pay or shall be unable to pay
its debts as such debts become due, or (ii) shall make an assignment for
the benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a substantial
part of its assets, or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or (iv) shall have had any such petition or
application filed or any such proceeding commenced against it that is not
dismissed within thirty (30) days, or (v) shall indicate, by any act or
intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for
relief or the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets, or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a
period of sixty (60) days or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the charter or certificate of formation thereof shall
expire or be revoked;
(f) A default or event of default shall occur under any of the other
Loan Documents and, if subject to a cure right, such default or event of
default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or performance of
any obligation now or hereafter owed to Lender in connection with any
other indebtedness of Borrower now or hereafter owed to Lender;
(h) Borrower shall have defaulted and continue to be in default in
the timely payment of or performance of any covenant relating to any other
indebtedness or obligation, which in the aggregate exceeds Fifty Thousand
and No/100ths Dollars
17
($50,000.00) or materially adversely affects Borrower's operations,
properties or financial condition;
(i) A significant change in the executive staff, ownership, or
management of Borrower or NFI shall occur; or
(j) Lender in good faith based on substantiated evidence believes
its prospect of payment and performance is materially impaired.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may be cured by
payment of a sum of money) of notice thereof to Borrower given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrower and an opportunity to cure any Curable Default of
which Borrower has had actual knowledge for the requisite number of days set
forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any Event
of Default described in subsection 5.1(d), the indebtedness evidenced by the
Note as well as any and all other indebtedness of Borrower to Lender shall be
immediately due and payable in full; and upon the occurrence of any other Event
of Default described above, Lender at any time thereafter may at its option
accelerate the maturity of the indebtedness evidenced by the Note as well as any
and all other indebtedness of Borrower to Lender; all without notice of any
kind. Upon the occurrence of any such Event of Default and the acceleration of
the maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and all
rights and remedies possessed by Lender pursuant to the terms of the Note
and all of the other Loan Documents; and
(b) Lender shall have any and all other rights and remedies that
Lender may now or hereafter possess at law, in equity or by statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lender to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed expedient by Lender.
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5.4 Proceeds of Remedies. Any or all proceeds resulting from the exercise
of any or all of the foregoing remedies shall be applied as set forth in the
Loan Document(s) providing the remedy or remedies exercised, if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including without limitation
reasonable attorneys' fees and disbursements, incurred by Lender in
connection with the exercise of its remedies;
Second, to the expenses of curing the default that has occurred, in
the event that Lender elects, in its sole discretion, to cure the default
that has occurred;
Third, to the payment of the Obligations of Borrower, including but
not limited to the payment of the principal of and interest on the
indebtedness evidenced by the Note, in such order of priority as Lender
shall determine in its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other person
lawfully thereunto entitled.
ARTICLE 6
TERMINATION
6.1 Termination of this Agreement. This Agreement shall remain in full
force and effect until the payment in full by Borrower of the Obligations, at
which time Lender shall cancel the Note and deliver it to Borrower; provided,
however, that the indemnities provided in Section 7.15 shall survive the
termination of this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 Performance By Lender. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith (including but not
limited to reasonable attorneys' fees), with interest thereon at the highest
default rate provided in the Note, shall be immediately repaid to Lender by
Borrower and shall constitute a part of the Obligations. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this Agreement
one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
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7.3 Costs and Expenses. Borrower agrees to pay all reasonable costs and
expenses incurred by Lender in connection with the making of the Loan, including
but not limited to filing fees, recording taxes and reasonable attorneys' fees,
promptly upon demand of Lender. Borrower further agrees to pay all premiums for
insurance required to be maintained by Borrower pursuant to the terms of the
Loan Documents and all of the out-of-pocket costs and expenses incurred by
Lender in connection with the collection of the Loan, amendment to the Loan
Documents, or prepayment of the Loan, including but not limited to reasonable
attorneys' fees, promptly upon demand of Lender.
7.4 Assignment. The Note, this Agreement and the other Loan Documents may
be endorsed, assigned and/or transferred in whole or in part by Lender, and any
such holder and/or assignee of the same shall succeed to and be possessed of the
rights and powers of Lender under all of the same to the extent transferred and
assigned. Lender may grant participations in all or any portion of its interest
in the indebtedness evidenced by the Note, and in such event Borrower shall
continue to make payments due under the Loan Documents to Lender and Lender
shall have the sole responsibility of allocating and forwarding such payments in
the appropriate manner and amounts. Borrower shall not assign any of its rights
nor delegate any of its duties hereunder or under any of the other Loan
Documents without the prior written consent of Lender.
7.5 Time of the Essence. Time is of the essence with respect to each and
every covenant, agreement and obligation of Borrower hereunder and under all of
the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Note or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Loan or otherwise, shall the interest and other charges agreed to
be paid to Lender for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Note shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
indebtedness evidenced by the Note and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Note exceed the maximum amounts permitted from
time to time by applicable law.
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7.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, or sent by certified mail or overnight via nationally recognized
courier service (such as Federal Express), to the other party at the address set
forth below, or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal delivery or
telecopy or two (2) business days after the date of mailing (or the next
business day after delivery to such courier service), as the case may be, shall
be the date of such notice, election or demand. For the purposes of this
Agreement:
The Address of Lender is: Commerce Capital, L.P.
Suite 2602
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopy No.: 615/244-1432
with a copy to: Baker, Donelson, Bearman & Xxxxxxxx
Suite 1700
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxx, Esq.
Telecopy No.: 615/726-0464
The Address of Borrower is: XxxxxxxxxxxxXxxx.xxx, LLC
0000 Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: 804/984-5111
with a copy to: XxXxxxx Xxxx, A Professional
Corporation
000 Xxxx Xxxx Xxxxxx, Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Esq.
Telecopy No.: 804/783-2294
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7.10 Entire Agreement. This Agreement and the other written agreements
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by
Borrower were not based upon any fact or material provided by Lender, nor was
Borrower induced or influenced to enter into this Agreement or the other Loan
Documents by any representation, statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement shall be construed and
enforced under the laws of the State of Tennessee applicable to contracts to be
wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
7.12 Survival of Representations and Warranties. All representations and
warranties contained herein or in any of the Loan Documents or made by or
furnished on behalf of Borrower in connection herewith or in any Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents.
7.13 Counterparts. This Agreement may be executed by facsimile, in any
number of counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
7.14 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that Borrower, Lender and their respective agents have participated in the
preparation hereof.
7.15 General Indemnification. Borrower agrees to indemnify Lender, its
officers, directors, employees and agents (individually, an "Indemnified Party"
and collectively, the "Indemnified Parties") and each of them and agrees to hold
each of them harmless from and against any and all losses, liabilities, damages,
costs, expenses and claims of any and every kind whatsoever (except those
arising solely by reason of the gross negligence or wilful misconduct of an
Indemnified Party) which may be imposed on, incurred by, or asserted against the
Indemnified Parties or any of them arising by reason of any action or inaction
or omission to any act legally required of Borrower (including as required
pursuant hereto or pursuant to any other Loan Document).
7.16 Standard of Care; Limitation of Damages. Lender shall be liable to
Borrower only for matters arising from this Agreement or otherwise related to
the Obligations resulting from Lender's gross negligence or willful misconduct,
and liability for all other matters is
22
hereby waived. Lender shall not in any event be liable to Borrower for special
or consequential damages arising from this Agreement or otherwise related to the
Obligations.
7.17 Consent to Jurisdiction; Exclusive Venue. Borrower hereby irrevocably
consents to the jurisdiction of the United States District Court for the Middle
District of Tennessee and of all Tennessee state courts sitting in Davidson
County, Tennessee, for the purpose of any litigation to which Lender may be a
party and which concerns this Agreement or the Obligations. It is further agreed
that venue for any such action shall lie exclusively with courts sitting in
Davidson County, Tennessee, unless Lender agrees to the contrary in writing.
7.18 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS,
PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE,
AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR
THE LOAN DOCUMENTS.
[SIGNATURES ON THE FOLLOWING PAGE]
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[SIGNATURE PAGE TO LOAN AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
COMMERCE CAPITAL, L.P.
a Tennessee limited partnership
By: Commerce Equity Capital Corporation
Title: General Partner
By: /s/ Xxxx Xxxxx
------------------------------------
Title: Vice President
------------------------------------
BORROWER:
XXXXXXXXXXXXXXXX.XXX, LLC,
a Delaware limited liability company
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Title: President
-------------------------------------------
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