EXHIBIT 10.39
COMMERCIAL LOAN AGREEMENT
This COMMERCIAL LOAN AGREEMENT ("Agreement") is entered into as of August 21,
2000, by and between NEUTRAL POSTURE ERGONOMICS, INC., a Texas corporation, with
its principal place of business in Brazos County, TX ("Borrower"), and COMPASS
BANK, an Alabama state chartered bank ("Lender").
SECTION 1. DEFINITIONS AND GENERAL RULES. The following definitions and general
rules will apply hereto:
1.1 GENERAL RULES. For the purposes of this Agreement:
(a) Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall
include the singular. Additional definitions may be found in the preamble
and throughout this Agreement;
(b) All accounting terms not otherwise defined herein will have the
meanings assigned to them in accordance with generally accepted accounting
principles, consistently applied; and
(c) The words "herein", "hereof", "hereunder" and words of similar
import refer to this Agreement as a whole and not to a particular section,
paragraph or other subdivision.
1.2 DEFINITIONS. As used in this Agreement, the following terms will have
the following meanings unless the context requires otherwise:
ACCOUNT shall mean all accounts, contract rights, general
intangibles, and receivables and claims whether now or hereafter arising,
all guaranties and security therefor and all of Borrower's right, title,
and interest in the goods purchased and represented thereby including all
of Borrower's rights in and to returned goods and rights of stoppage in
transit, replevin and reclamation as unpaid vendor.
AFFILIATE of any Person means any Person that, directly or
indirectly, controls or is controlled by or is under common control with
such Person and, without limiting the generality of the foregoing, shall
include any Person that beneficially owns or holds five percent (5%) or
more of any class or series of voting securities of such Person (or in the
case of a Person that is not a corporation, five percent (5%) or more of
the equity interest). For the purposes of this
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definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such
Person, whether through ownership of voting securities or by contract or
otherwise.
AGREEMENT means this Commercial Loan Agreement, as originally
executed or hereafter amended.
BORROWING BASE shall mean eighty percent (80%) of the aggregate
outstanding principal balance of the Borrower's Eligible Accounts plus
Fifty percent (50%) of Borrower's inventory as set forth in the most
recent Borrowing Base Certificate but in no event in excess of the
Commitment Amount.
BORROWING BASE CERTIFICATE shall mean a certificate in the form of
EXHIBIT "A" to this Agreement, completed in all appropriate respects and
executed by the chief executive or chief financial officer of the Borrower
and setting forth Borrower's computation of the Borrowing Base as of the
date of such certificate.
BUSINESS DAY means a day (other than Saturday, Sunday or a legal
holiday) on which Lender is open for business.
COLLATERAL means all accounts receivables and inventory now owned or
hereafter acquired, including but not limited to those listed in EXHIBIT
"B" and EXHIBIT "C" attached hereto and incorporated herein by this
reference. The term "Collateral" shall also mean all or, where the the
context permits or requires, any portion of the above, and all or, where
the context permits or requires, any interest therein. The term
"Collateral" as used in this Agreement shall further mean and include, all
of the foregoing property, as well as any accessions, additions and
attachments thereto and the proceeds and products thereof, including
without limitation, all cash, equipment, general intangibles, accounts,
inventory, fixtures, notes, drafts, acceptances, securities, instruments,
chattel paper, insurance proceeds payable because of loss or damage, or
other property, benefits or rights arising therefrom, and in and to all
returned or repossessed goods arising from or relating to any of the
property described herein or other proceeds of any sale or other
disposition of such property.
COMMITMENT AMOUNT means $2,500,000.
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CORPORATION means corporations, S corporations, partnerships, joint
ventures, joint stock associations, business trusts, individual trusts and
other business entities, including for profit and non-profit entities.
CURRENT ASSETS shall mean, as of any applicable date of
determination, all cash, non-affiliated customer receivables, United
States government securities, inventories and other assets of the Borrower
that should be classified as current in accordance with GAAP.
CURRENT LIABILITIES shall mean, as of any applicable date of
determination, all liabilities of the Borrower that should be classified
as current in accordance with GAAP, plus all amounts outstanding under the
Revolving Credit Note.
CURRENT RATIO shall mean Current Assets divided by Current
Liabilities.
DEBT shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of the Borrower, whether
matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, joint or several, that should be classified as
liabilities in accordance with GAAP.
DEFAULT means any event specified in Section 7.1 of this Agreement,
regardless of whether any requirement for the giving of notice or lapse of
time or any other condition has been satisfied.
ELIGIBLE ACCOUNT means an account as specified in Section 2.7 of
this Agreement.
EURODOLLAR RATE means a rate per annum which on any day is equal to
the lesser of (a) the sum of (i) the LIBOR Rate for the relevant
Eurodollar Interest Period plus (ii) applicable Margin, or (b) the Maximum
Rate. The Eurodollar Rate shall be computed on the basis at the actual
number of days elapsed in a year consisting of 360 days, unless such
computation would result in an annualized effective rate greater than the
Maximum Rate, in which case interest shall be calculated on the basis of a
year of 365 days or 366 days, as the case may be.
EURODOLLAR RATE BORROWING. As defined in the Note.
EVENT OF DEFAULT means any event specified in Section 7.1 of this
Agreement, provided that any requirement in connection with such event for
the giving of notice or lapse of time or any other condition has been
satisfied.
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FINANCING STATEMENTS means the Financing Statements executed by
Borrower on even date herewith and to be executed in the future for the
benefit of Lender to further secure the payment of the Loan and covering
the accounts and inventory, to be filed in the Uniform Commercial Code
Records of Brazos County, Texas, and the Office of the Secretary of State
of Texas, respectively.
FIXED CHARGE COVERAGE shall mean the sum of net income plus
depreciation, plus amortization plus interest expense, divided by the sum
of current maturities of long-term debt (the Revolving Credit Note being
considered short-term debt for purposes hereof) plus current maturities of
capital leases, plus interest expense.
GAAP shall mean general accepted accounting principals then in
effect.
GOVERNMENTAL AUTHORITY means any foreign governmental authority, the
United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, department,
commission, board, bureau, or court having jurisdiction over Lender, the
Parties or their respective assets or property.
INDEBTEDNESS means the total liabilities of a Person calculated in
accordance with generally accepted accounting principles consistently
applied.
INDEX RATE shall mean shall mean on any day, the "Prime Rate" as
published in THE WALL STREET JOURNAL on that day under the section "Money
Rates", and being defined therein as "the base rate on corporate loans at
large U.S. money center commercial banks." If this section of THE WALL
STREET JOURNAL reflects more than one rate as being the "Prime Rate", then
the highest rate shall be the Index Rate. On days when THE WALL STREET
JOURNAL is not published, the Index Rate shall be the "Prime Rate" stated
in the most recently published edition of THE WALL STREET JOURNAL. In the
event that THE WALL STREET JOURNAL ceases to be published altogether, or
ceases to publish the "Prime Rate", then Lender, its assigns or
successors, shall establish and choose a substitute Index Rate which is
based upon comparable information, in the exercise of its sole discretion,
without any notice to Borrower or any person being required. The Index
Rate shall automatically fluctuate, upward, downward, without notice to
Borrower or any other person, as and in the amount the said published
"Prime Rate" shall fluctuate. The Index Rate is a reference rate and does
not necessarily represent Lender's best or lowest rate or a favored rate,
and Lender disclaims any statement, representation or warranty to the
contrary. The Index
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Rate shall be calculated based upon days actually elapsed in a year
consisting of 360 days.
INVENTORY means all inventory, wherever located and whether now or
hereafter existing (including, but not limited to raw materials and work
in progress, finished goods and materials used or consumed in the
manufacture or production thereof, goods in which Borrower has interest in
mass or a joint order or other interest or rights of any kind, and goods
which are returned to or repossessed by Borrower) and all accessions
thereto and products thereof and documents therefor.
LEGAL REQUIREMENT means any law, statute, ordinance, decree,
requirement, order, judgment, rule, or regulation (or interpretation of
any of the foregoing) of, and the terms of any license or permit issued
by, any Governmental Authority.
LETTER OF CREDIT means a letter of credit to be issued hereunder by
Lender for the benefit of Borrower.
LETTER OF CREDIT COMMITMENT means $250,000.00.
LETTER OF CREDIT LIABILITIES means the amounts then owing to Lender
drawn under the Letters of Credit.
LEVEL I STATUS exists at any date on which the sum of (i) the
aggregate outstanding amount of the Loan, (ii) all pending loan advance
requests, and (iii) the aggregate Letter of Credit Liabilities is less
than or equal to Seventy Percent (70%) of the Borrowing Base in effect at
the end of the immediately preceding calendar month.
LEVEL II STATUS exists at any date on which the sum of (i) the
aggregate outstanding amount of the Loan, (ii) all pending loan advance
requests, and (iii) the aggregate Letter of Credit Liabilities exceeds
Seventy Percent (70%) of the Borrowing Base in effect at the end of the
immediately preceding calendar month.
LIEN shall mean any interest or security interest in property
securing an obligation owed to, or a claim by, a Person other than the
owner of the property, whether such interest is based on the common law,
constitutional provision, statute or contract, and including but not
limited to the security interest lien arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall
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include exceptions, covenants, conditions, restrictions, leases and other
exceptions and encumbrances affecting such property. For the purposes of
this Agreement, a Person shall be deemed to be the owner of any property
which it or he has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to
the property has been retained by or vested in some other Person for
security purposes.
LOAN shall refer to the combined principal amount due under the
Revolving Promissory Note and the Letters of Credit.
LOAN DOCUMENTS means this Agreement, the Note, all Security
Instruments, all instruments, certificates and agreements now or hereafter
executed or delivered to or by Lender pursuant to any of the foregoing,
and all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.
LONDON INTERBANK OFFERED RATE OR LIBOR means, with respect to a
LIBOR Borrowing for the relevant Interest Period, the annual interest rate
appearing on Telerate page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "LIBOR" shall mean, for any LIBOR
Borrowing for the relevant Interest Period, the annual interest rate
appearing on the Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period, provided that, if more than one rate
is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
MARGIN means (i) for any day on which Level I Status exists, 1.75%
or (ii) for any day on which Level II Status exists 2.25%.
MATURITY DATE means the earlier of (a) September 30, 2001, or (b)
One Hundred Eighty (180) days after the issuance date of a Letter of
Credit with respect to the Letter of Credit, as the case may be.
Notwithstanding the foregoing, the Maturity Date may be sooner if
otherwise accelerated as provided herein.
MAXIMUM RATE shall have the meaning set forth in the Note.
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NOTE means the Revolving Promissory Note issued pursuant to Section
2.1 hereof, as the same may be amended, modified, supplemented, renewed,
extended or rearranged at any time.
OBLIGATIONS means the obligations and liabilities of Borrower to
Lender evidenced by the Note and any and all other indebtedness,
liabilities and obligations whatsoever of Borrower to Lender, whether
direct or indirect, absolute or contingent, due or to become due, and
whether now existing or hereafter arising, and howsoever evidenced or
acquired, whether joint or several, and whether evidenced by note, draft,
acceptance, guaranty, open account, letter of credit, surety agreement or
otherwise; it being contemplated by the parties hereto that Borrower may
become indebted to Lender in further sum or sums.
PERMITTED LIENS means (i) liens created by the Security Instruments
or this Agreement, (ii) liens for taxes, assessments and other
governmental charges not yet payable (excluding any lien imposed pursuant
to any of the provisions of ERISA), or the validity of which are being
contested in good faith by appropriate proceedings and as to which
adequate reserve have been set aside on the books of the Borrower in
accordance with GAAP, (iii) deposits or pledges to secure the payment of
workmen's compensation, unemployment insurance or other social security
benefits or obligation, public or statutory obligations, surety or appeal
bonds or other obligations of a like general nature incurred in the
ordinary course of business, provided all such liens in the aggregate have
no reasonable likelihood of causing a material adverse effect, (iv)
landlords', mechanics', materialmen's, warehousemen's, carriers', vendors'
or other like liens arising by operation of law in the ordinary course of
business or which are being contested in good faith by appropriate
proceedings and against which the Borrower has provided adequate reserves
in accordance with GAAP, and (v) liens permitted in the Security
Instruments or otherwise by the Lender in writing.
PERSON means any Corporation, estate, individual, unincorporated
business entity, Governmental Authority or any other form of entity.
PRIME RATE BORROWING. As defined in the Note.
SECURITY AGREEMENT means the Security Agreement covering the
Collateral and other property of Borrower as therein described, executed
by Borrower in favor of Lender on even date herewith, as the same may be
amended, modified, supplemented, renewed, extended or rearranged from time
to time.
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SECURITY INSTRUMENTS means the Financing Statements, the Security
Agreement and all other documents securing the payment or performance of
the Obligations, together with all financing statements and other
documents necessary for recordation of the same or perfection of the Liens
granted thereby.
SUBSIDIARY means any Corporation of which more than fifty percent
(50%) of the issued and outstanding securities having ordinary voting
power is owned or controlled, directly or indirectly, by a Person and, or,
one or more of its Subsidiaries.
TANGIBLE NET WORTH means the total shareholder equity of Borrower
less goodwill and all other intangible assets as defined by GAAP.
UNUSED PORTION shall mean that portion of the Commitment Amount that
is not used during a calendar quarter and shall be calculated by
subtracting from the Commitment Amount the weighted average of the sum of
(i) the daily aggregate outstanding amount of the Loan, and (ii) the daily
aggregate Letter of Credit Liabilities.
SECTION 2. THE LOAN.
2.1 $2,500,000.00 LOAN. Subject to and upon the terms, conditions,
covenants and agreements contained in the Loan Documents, Lender agrees to loan
to Borrower an amount not to exceed $2,500,000.00 (the "Loan"), the proceeds of
which Loan shall be disbursed by Lender and utilized by Borrower solely for the
purposes described in Section 2.2, below. The Loan shall be evidenced by the
Note payable to the order of Lender in the form attached hereto as EXHIBIT "D"
and incorporated herein by reference. The principal of and interest to accrue on
the Loan shall be due and payable in the manner provided in the Note.
All renewals, extensions, modifications and rearrangements of the Note, if
any, shall be deemed to be made pursuant to this Agreement and, accordingly,
shall be subject to the terms and provisions hereof, and Borrower shall be
deemed to have ratified, as of such renewal, extension, modification or
rearrangement date, all of the representations, warranties, covenants and
agreements set forth herein.
2.2 PERMISSIBLE USES OF LOAN PROCEEDS. The sole purposes for which
Borrower shall be allowed to use the proceeds of the Loan are as follows:
(a) Finance short term working capital needs; and
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(b) Provide Letters of Credit for the benefit of Borrower up to a
$250,000.00 to facilitate Borrower's acquisitions and/or to
assist Borrower in establishing new credit with its trade
vendors.
2.3 ADVANCES OF LOAN PROCEEDS. Funding by Lender to Borrower of advances
of the Loan proceeds may be made by Lender to Borrower, in the following manner
and only if:
(a) Borrower shall prepare and deliver to Lender a Borrowing Base
Certificate prepared using the most recent calendar month end
information;
(b) Borrower shall provide Lender with a completed and executed
Rate Designation Notice in the form attached to the Note as
Exhibit "A";
(c) Advances under the Loan shall be in increments of (i)
$500,000.00 for Eurodollar Rate Borrowings, (ii) $5,000.00 in
connection with Letters of Credit, and (iii) $50,000.00 for
Prime Rate Borrowings;
(d) If connection with a Eurodollar Rate based advance request,
Borrower currently has no more than three (3) outstanding
Eurodollar Rate Borrowings in effect;
(e) The sum of (i) the aggregate outstanding amount of the Loan,
(ii) the aggregate Letter of Credit Liabilities in effect, and
(iii) the requested advance shall not exceed the Borrowing
Base nor the Commitment Amount; and
(f) Borrower is not in default under this Agreement, the Note, or
the Security Instruments.
2.4 PAYMENTS. All payments of principal or interest on the Note shall be
made to Lender at its office set forth in Section 8.8. Whenever any payment of
principal or interest on the Note shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding
Business Day and interest shall be payable for such extended time at the rate of
interest with respect thereto in effect at the due date.
The Note shall be due and payable in monthly installments of interest
only, payable on or before last day of every month, beginning August 31, 2000,
and
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continuing regularly thereafter until the Maturity Date, when the entire
amount hereof, principal and interest remaining unpaid, shall be then due and
payable.
In the event that the outstanding principal on the Loan exceeds Borrower's
Borrowing Base, Borrower shall make a principal payment within three (3)
Business Days in an amount sufficient to reduce the outstanding principal to the
Borrowing Base.
2.5 COMPUTATION OF INTEREST. Borrower's liability for payment of principal
and interest provided in the Note shall be limited to and calculated on sums
actually advanced to Borrower from the date or dates of each such advance and
the Loan shall bear interest on the outstanding principal amount thereof, for
each day from the date such Loan is made until it becomes due at a rate per
annum equal to the Adjusted Prime Rate (as defined in the Note) or Eurodollar
Rate as selected by Borrower via the Rate Designation Notice. Such interest
shall be payable for each interest period as provided for in the Note.
2.6 SECURITY. Payment of the Note and the performance of the Obligations
will be secured, directly or indirectly, by a perfected security interest, in
and upon, the Collateral herein described. Borrower agrees to execute,
acknowledge and deliver to Lender the Security Instruments, in form and
substance acceptable to Lender, as in the good faith and discretion of Lender
may be necessary to enforce, grant to Lender and perfect the security interests
in the Collateral. Borrower and Lender agree that all Collateral now or
hereafter securing any of the Obligations hereunder also shall secure any and
all other indebtedness and liabilities now or hereafter owing by Borrower to
Lender.
2.7 ELIGIBLE ACCOUNTS. As to each Account represented by the Borrower to
be an "Eligible Account" on a Borrowing Base Certificate, as of the date of each
such Borrowing Base Certificate:
(a) Such Account arose in the ordinary course of the business of
Borrower out of either (i) a bona fide sale of Inventory by the Borrower,
and in such case such Inventory has in fact been shipped to, and accepted
and retained by, the appropriate account debtor or the sale has otherwise
been consummated in accordance with such order, or (ii) services performed
by the Borrower, under an enforceable contract, and in such case such
services have in fact been performed for the appropriate account debtor in
accordance with such contract.
(b) Such Account represents a legally valid and enforceable claim
which is due and owing to the Borrower, by such account debtor and for
such amount as
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is represented by the Borrower, to the Bank on such Borrowing Base
Certificate, such Account is due and payable not more than thirty (30)
days from the delivery of the related Inventory, or the performance of the
related services, giving rise to such Account and such Account has not
been due for more than ninety (90) days (from the date of invoice).
(c) The unpaid balance of such Account is as represented by the
Borrower, and not subject to any defense, counterclaim, setoff, credit,
allowance or adjustment by the account debtor because of returned,
inferior or damaged Inventory or services, or for any other reason, except
for customary discounts allowed by Borrower, in the ordinary course of
business for prompt payment, and there is no agreement between Borrower,
the related account debtor and any other person for any rebate, discount,
concession or release of liability, in whole or in part.
(d) The transactions leading to the creation of such Account comply
with all applicable state and federal laws and regulations.
(e) The Borrower has granted to the Bank a perfected security
interest in such Account (as an item of the Collateral) prior in right to
all other persons (other than Permitted Liens), and such Account has not
been sold, transferred or otherwise assigned by the Borrower, to any
person, other than the Bank.
(f) Such Account is not represented by any note, trade acceptance,
draft or other negotiable instrument or by any chattel paper, except any
such as have been endorsed and delivered by the Borrower, to the Bank on
or prior to such Account's inclusion on such Borrowing Base Certificate.
(g) The Borrower has not received, with respect to such Account, any
notice of the death of the related account debtor or any partner thereof,
nor of the dissolution, liquidation, termination of existence, insolvency,
business failure, appointment of a receiver for any part of the property
of, assignment for the benefit of creditors by, or the filing of a
petition in bankruptcy or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against, such account debtor.
(h) The account debtor on such Account is not:
(i) an affiliate of the Borrower;
(ii) the United States of America or any department, agency
or
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instrumentality thereof;
(iii) a citizen or resident of any jurisdiction other than one
of the United States (unless such Foreign Account is
subject to a guaranty of payment in the form of a letter
of credit issued by a Bank which is acceptable to the
Bank); or
(iv) an account debtor whom the Bank has, in the exercise of
such Bank's sole discretion, determined to be (based on
such factors as the Bank deems appropriate) an
ineligible account debtor and as to which the Bank has
notified the Borrower, PROVIDED, HOWEVER, that any such
notice shall not apply as to any Account of such account
debtor which has been included on a Borrowing Base
Certificate by the Borrower prior to the giving of such
notice by the Bank and which meets each and every other
requirement under this Agreement for the denomination of
such Account as an "Eligible Account."
NOTWITHSTANDING the foregoing, the Borrower may include in Eligible Accounts,
provided the Account is otherwise eligible hereunder, up to $100,000.00 of
Accounts where the account debtor is the United States of America or any
department, agency or instrumentality thereof.
(i) Such Account is not payable by an account debtor for whom Ten
percent (10%) or more of the total amount then owed to the Borrower and/or
its Subsidiaries by that account debtor is ninety (90) days or more from
invoice date.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Borrower represents, warrants and
agrees as follows, with knowledge of Lender's intended reliance thereon in
making each advance of proceeds under the Note:
3.1 LICENSE AND PERMITS. Borrower has filed all such assumed name
certificates and is duly licensed and has all permits necessary to do business
in each jurisdiction in which a failure to be such may have a material adverse
effect on Borrower, its business or its properties, and has all powers and has
satisfied all Legal Requirements necessary to own and operate its properties and
to carry on its business as contemplated under this Agreement.
3.2 STOCK AND EQUITABLE SECURITIES. All of Borrower's issued and
outstanding stock and equitable securities and the holder's thereof of five
percent (5%) or more as
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of the date of execution hereof are described on EXHIBIT "E" attached hereto and
incorporated herein.
3.3 CORPORATE INDEBTEDNESS. All of the debts, excluding trade payables
incurred in the ordinary court of business, owed directly or indirectly by
Borrower on loan date herewith are described on EXHIBIT "F" attached hereto and
incorporated herein.
3.4 AUTHORIZATION; CONFLICT; ENFORCEABILITY. The execution, delivery and
performance of the Loan Documents by Borrower: (a) will not contravene, or
constitute a material default under, any Legal Requirement, or any mortgage,
indenture, contract, agreement or other instrument, binding upon Borrower; (b)
will not require the obtaining of any consents, approvals, permits, or
registrations from any Governmental Authority or other Person; and (c) except as
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally and by general equitable principles, when duly
executed and delivered in accordance with this Agreement, will constitute legal,
valid and binding obligations of Borrower in accordance with their respective
terms.
3.5 LITIGATION. There is no action, suit or proceeding pending or, to the
knowledge of Borrower, threatened against Borrower before any Governmental
Authority in which there is a reasonable possibility of an adverse decision
which, if such action, suit or proceeding were adversely determined: (i) would
subject Borrower to any liability not fully covered by insurance; or (ii) would
materially adversely affect the financial position or the results of operations
of Borrower or its businesses or the ability of Borrower to perform its
obligations under the Loan Documents. Borrower is not in default with respect to
any material Legal Requirement. Borrower agrees to notify Lender in writing of
any such action, suit or proceeding hereafter filed against within five (5) days
after Borrower's first knowledge thereof, and to explain in reasonable detail in
such notice the facts and circumstances surrounding, the cause of action alleged
in such action, suit or proceeding. Current litigation is disclosed in EXHIBIT
"G" attached hereto and incorporated herein.
3.6 NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
is continuing.
3.7 USE OF PROCEEDS. The proceeds of the Loan will be used by Borrower
solely for the purposes described in Section 2.2. The Loan is and shall be a
"business loan", as such term is used in the Depository Institutions
Deregulation and Monetary Control Act of 1980, as amended, and the Loan is for
business, commercial, investment
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or other similar purpose and not primarily for personal, family, household or
agricultural use, as such terms are used in Chapter One of the Texas Credit
Code.
3.8 TAX RETURNS. Borrower has filed all federal, state and local tax
returns required to be filed by it. Borrower has paid or caused to be paid all
taxes required to be paid in connection with its organization, and Borrower has
no knowledge of any actual or proposed assessments for additional federal, state
or other taxes for any fiscal periods.
3.9 LIENS AND SECURITY INTERESTS. The security interests, mortgages and
liens attaching to the Collateral pursuant to the Loan will constitute at all
times valid, perfected and enforceable security interests, mortgages and liens
in favor of Lender, subject to no prior or superior Lien (other than Permitted
Liens). Before and after funding under the Note, Borrower will have taken, or
will have participated with Lender in taking, all necessary action (including
making all necessary filings) to provide Lender with first priority perfected
security interests, mortgages and liens in the Collateral under the laws of all
applicable jurisdictions.
3.10 SOLVENCY. Borrower: (i) is solvent with assets of a value that
exceeds the amount of its liabilities; (ii) is able to and anticipates that it
will be able to meet its debts as they mature; and (iii) has adequate capital to
conduct its business.
3.11 LEGALITY. To the best of Borrower's knowledge, the making of the Loan
is not prohibited by, or will not subject Lender to any penalty or onerous
condition under, any Legal Requirement.
3.12 REPRESENTATIONS AND WARRANTIES. No representation or warranty made by
Borrower in any Loan Document contains any untrue statement of a material fact
or omits to state any material fact necessary to make such representation or
warranty not misleading.
SECTION 4. CONDITIONS TO LENDER'S OBLIGATIONS.
Any obligation of Lender to make any advances of proceeds under the Note
is subject to the performance by Borrower of all of its obligations under this
or any other agreement between Borrower and Lender, and to the satisfaction of
the following further conditions (but no advance made before satisfaction of any
such condition shall be deemed to be a waiver of such conditions in respect of
any subsequent advance):
COMMERCIAL LOAN AGREEMENT PAGE 14
<PAGE>
4.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in the Loan Documents are true and correct in all material respects on
and as of the applicable date of borrowing. A Loan request by Borrower will be
deemed to be a representation and warranty by Borrower on the date of such Loan
request as to the matters specified in this Section 4.1.
4.2 DELIVERY OF LOAN DOCUMENTS. Receipt by Lender of all the
documents required or contemplated hereunder from the appropriate parties,
including the following:
(a) The Loan Documents; and
(b) All documents Lender may reasonably request relating to
Borrower's possession of all licenses and permits from all Governmental
Authorities necessary to enable Borrower to lawfully conduct its business
in all jurisdictions where Borrower now conducts or may during the term of
the Loan conduct its business.
4.3 PAYMENT OF EXPENSES. Borrower shall have paid or made provision for
the payment of all expenses of the type described in Section 8.7.
4.4 FILING OF FINANCING STATEMENTS. The Financing Statements shall have
been executed by Borrower and shall have been recorded in the Uniform Commercial
Code Records of Brazos County, Texas, and the Office of the Secretary of State
of Texas, with all filing fees therefor paid.
SECTION 5. AFFIRMATIVE COVENANTS. During the term of this Agreement and until
the Loan and all of the Obligations have been paid and performed in full, unless
compliance with the provisions of the following subsections shall have been
waived in writing by Lender, Borrower agrees as follows:
5.1 FINANCIAL STATEMENTS. Borrower will furnish the following to Lender:
(a) As soon as available, but in any event, within forty-five (45)
days after the end of each calendar quarter, beginning with Borrower's
fiscal year ending June 30, 2000, (i) a copy of unaudited interim
financial statements of Borrower prepared and certified by Borrower and
prepared in conformity with generally accepted accounting principles
(subject to normal year-end audit adjustments), and consisting of at least
balance sheets as of the close of such period and profit and loss
statements for the quarter then ended and for the
COMMERCIAL LOAN AGREEMENT PAGE 15
<PAGE>
period from the beginning of the fiscal year to the close of such period;
and (ii) a No Default Certificate (as described in part e of this Section
5.1 below) executed by an authorized officer of Borrower;
(b) As soon as available, but in any event within one hundred twenty
(120) days after the end of each fiscal year, beginning with Borrower's
fiscal year ending June 30, 2000, a copy of Borrower's audited financial
statement and audit report;
(c) If there is Indebtedness due and owing on the Note, as soon as
available, but in any event, within twenty (20) days after the end of each
month, or if there is no Indebtedness due and owing on the Note then
within forty-five (45) days after the end of each calendar quarter, the
following:
(i) a detailed listing and aging report signed by an
authorized officer of Borrower certifying and detailing
the then existing accounts receivables and a detailed
aging report thereof; and
(ii) furnish to Lender a Borrowing Base Certificate
confirming that the aggregate unpaid principal amount of
the Loan does not exceed the lesser of the Commitment
Amount or the Borrowing Base as then in effect (or, if
such is not the case, accompanied by a prepayment of the
Note in accordance with Section 2.4 of this Agreement).
(d) Such other financial and other information concerning Borrower
as Lender shall reasonably request from time to time;
(e) Together with each delivery of the financial statements required
in this Section 5.1, furnish to Lender a certificate of its chief
executive or financial officer stating that no Event of Default or Default
has occurred, or if any such Event of Default or Default exists, stating
the nature thereof, the period of existence thereof and what action
Borrower proposes to take with respect thereto. Such certificate shall
also demonstrate, by showing the applicable ratio or other calculation,
with such supporting information as Lender may require, that Borrower is
in compliance with this Agreement.
COMMERCIAL LOAN AGREEMENT PAGE 16
<PAGE>
5.2 FINANCIAL RATIOS.
(a) TANGIBLE NET WORTH. Borrower shall maintain a minimum Tangible
Net Worth of $7,500,000.00;
(b) DEBT RATIO. Borrower shall maintain the ratio of Debt to
Tangible Net Worth of not more than .75 to 1.0;
(c) CURRENT RATIO. Borrower shall maintain a Current Ratio of not
less than 1.5; and
(d) FIXED CHARGE COVERAGE. Borrower shall maintain a Fixed Charge
Coverage ratio of not less than 1.5 to 1.0 to be calculated
quarterly on a rolling quarterly basis.
5.3 ACCOUNTS RECEIVABLE AUDIT. Allow Lender to conduct, at least once per
year, and as of such dates as Lender shall designate upon reasonable notice to
the Borrower, an audit and verification of the Borrower's Accounts, to be
performed by the Bank or such other party as the Bank shall designate, and to be
performed in such form and detail as the Bank shall reasonably require.
5.4 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge when due all
Obligations.
5.5 NOTICE; LITIGATION. Borrower shall promptly give written notice to
Lender of: (i) the occurrence of any Default or Event of Default; (ii) any
legal, judicial or regulatory proceedings affecting Borrower or any of its
properties or assets in which the amount involved is material, is not covered
(subject to normal deductibles) by insurance and is likely to have a material
adverse effect on the business or the financial condition of Borrower; (iii) any
dispute between Borrower and any Governmental Authority or other Person that is
likely to materially interfere with the normal business operations of Borrower;
(iv) any substantial damage to any material part of the Collateral, specifying
the nature and extent of damage and whether such damage is being repaired in due
course, or total loss or destruction of any material part of the Collateral; (v)
any other action, event or condition of any nature of which it has knowledge
which may have, or lead to, or result in, any material adverse effect upon the
business, assets or financial condition of Borrower, all taken as a whole; or
(vi) the voluntary or involuntary bankruptcy of, or any assignment for the
benefit of creditors or the seeking of any relief under any bankruptcy or other
similar laws by, Borrower.
COMMERCIAL LOAN AGREEMENT PAGE 17
<PAGE>
5.6 MAINTENANCE OF PROPERTIES. Borrower will: (i) keep and maintain all
franchises, licenses, permits and properties useful and necessary in the conduct
of its business in good order and condition; and (ii) duly observe and conform
to all Legal Requirements relative to the conduct of its business or the
operation of its properties or assets. In the event of any failure on the part
of Borrower to maintain all requisite franchises, licenses, or permits, or to
properly observe and conform to all Legal Requirements, Borrower shall have a
period of twenty (20) days from the date of written notice from Lender to obtain
any required franchise, license or permit, or cure any such violation of Legal
Requirement. In the event that Borrower fails to effect such a cure, then the
same shall constitute an Event of Default hereunder, cumulative of and in
addition to the provisions of Section 7.1 hereof, and Lender shall thereafter be
authorized to take such actions as Lender may deem in its own discretion to be
necessary to remedy or cure such failure or violation, and any funds expended by
Lender in such regard shall constitute additional indebtedness evidenced by the
Note and secured by the Deed of Trust, bearing interest as provided for in the
Note. Should Lender elect to cure any such failure or violation in accordance
with the provisions hereof, such shall not be considered a cure of Borrower's
Default hereunder. The foregoing actions by Lender shall be cumulative of and in
addition to such other remedies as may be provided elsewhere in this Agreement.
5.7 INSURANCE. Borrower will maintain insurance with financially sound and
responsible companies, in such form, in such amounts and against such risks
(including, without limitation, public liability and property damage insurance)
as is customarily carried by companies engaged in the same or similar
businesses, operating like properties and similarly situated, plus any
additional insurance, if any, required in the Security Instruments. Borrower
will have the right to place any such insurance with any insurance carrier
reasonably acceptable to Lender. Upon execution of this Agreement, Borrower will
furnish to Lender: (i) a summary of the insurance coverage of Borrower, together
with certificates, as to insurance covering any of the Collateral, showing
Lender as loss payee to the extent its interest may appear, all such policies to
be noncancellable without 15 days' prior written notice to Lender, and will
supplement such summary from time to time as the amounts or terms of such
insurance coverage change; and (ii) copies of the applicable policies and proof
of payment of the premiums therefor.
5.8 PAYMENT OF TAXES. Borrower will pay and discharge when due all taxes,
assessments and other liabilities, except those being contested in good faith by
appropriate proceedings, and against which Borrower has set up adequate
reserves, in accordance with generally accepted accounting principles.
COMMERCIAL LOAN AGREEMENT PAGE 18
<PAGE>
5.9 FURTHER ASSURANCES. Borrower, at any time and from time to time, will
execute and deliver such further instruments and take such further action as may
reasonably be requested by Lender, in order to cure any defects in the execution
and delivery of, or to comply with or accomplish the covenants and agreements
contained in, the Loan Documents.
5.10 AVAILABILITY OF RECORDS. Borrower will permit any representative,
accountant, officer, employee, or attorney of Lender to: (i) visit and inspect
any of the properties of Borrower; (ii) examine and/or audit the books and
financial records of Borrower; (iii) verify the due investment and application
of the proceeds of the Note in accordance with Section 3.5 hereof; and (iv)
discuss the business affairs, finances and accounts of Borrower with its
officers and independent certified public accountants, all at such reasonable
times and during reasonable business hours, and as often as Lender may deem
reasonably necessary.
5.11 INSPECTION OF COLLATERAL. Borrower will permit Lender (and any Person
appointed by Lender to act for and on its behalf) to inspect the Collateral,
wherever located, at any time and from time to time.
SECTION 6. NEGATIVE COVENANTS. During the term of this Agreement and until the
Loan and all of the Obligations have been paid and performed in full, unless
compliance with the following subsections shall have been waived in writing by
Lender, Borrower agrees as follows:
6.1 LIMITATIONS ON LIENS. Without Lender's prior approval, Borrower will
not create, assume or suffer to exist any Lien (other than Permitted Liens) upon
any of the Collateral, whether now owned or hereafter acquired.
6.2 NATURE OF BUSINESS. Borrower will not: (i) change or allow to be
changed in any material respect its present methods of operation or manner of
doing business; (ii) carry on or allow to be carried on its business at any
location or locations other than those presently in existence; (iii) change or
allow to be changed its name or its identity; or (iv) change or allow to be
changed its structure, without the prior written consent of Lender.
6.3 SALE OF PROPERTY. Except in the ordinary course of business, Borrower
will not convey or otherwise dispose of (whether voluntarily or involuntarily)
or encumber (whether voluntarily or involuntarily) the Collateral or any portion
thereof in any manner without the prior written consent of Lender.
COMMERCIAL LOAN AGREEMENT PAGE 19
<PAGE>
6.4 USE OF LOAN PROCEEDS. Borrower shall not use any of the proceeds of
the Loan to defray living expenses, for other personal use, or for any other
purpose not expressly authorized by this Agreement.
6.5 FUTURE INDEBTEDNESS. Borrower shall not, without the prior written
consent of Lender: (i) encumber, or permit to be encumbered, any portion of the
Collateral or other property owned by the Borrower; or (ii) procure any other
debt, excluding trade payables incurred in the ordinary course of business.
6.6 NO DIVIDENDS. Without Lender's prior approval, Borrower will not
declare or pay any dividends.
SECTION 7. DEFAULT.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events or
conditions shall constitute an "Event of Default":
(a) Failure of Borrower to pay any installment of principal or
interest on the Note within ten (10) days of receipt of written
notice from Lender of such failure. Notwithstanding the foregoing,
Lender shall not be required to send such notice of failure to pay
more than one time during any calendar year;
(b) Any representation or warranty made by any Party in any of
the Loan Documents is untrue in any material respect as of the
date made or furnished;
(c) Default in the observance or performance of any of the
covenants, terms or agreements of the Loan Documents or any other
agreements, now or hereafter existing, with Lender;
(d) Borrower: (i) is generally not paying its Indebtedness as it
becomes due; (ii) fails to pay any principal or interest on any
obligation or obligations for borrowed money beyond the period of
grace, if any, provided for in the instrument or agreement under
which the same was created; or (iii) fails to observe or perform any
other term, condition or agreement contained in any obligation or
obligations for borrowed money or in any instrument or agreement
evidencing, securing or relating thereto if the effect thereof is to
permit or cause the holder or holders of such obligation (or a
trustee or an agent on behalf of such holder or holders) to
COMMERCIAL LOAN AGREEMENT PAGE 20
<PAGE>
cause any such obligation to become due prior to its stated maturity
and such failure shall continue for a period of twenty (20) days
after notice to Borrower by Lender of the same, subject to an
additional thirty (30) day cure period if, (i) the non-monetary
default is not cureable within the prescribed twenty (20) day period
and (ii) the Borrower has initiated steps to cure said violation in
a diligent and continuous manner within the twenty (20) day period
and continues to take steps to cure in a diligent and continuous
manner within the thirty (30) day period;
(e) Filing by Borrower of a voluntary petition or any answer seeking
reorganization, arrangement or readjustment of its debts or for any
other relief under any applicable bankruptcy act or law, or under
any other insolvency act or law, now or hereafter existing, or any
action by Borrower for, or the appointment by consent or
acquiescence of, a receiver or trustee for Borrower or for all or a
substantial part of its property; the making by Borrower of an
assignment for the benefit of creditors, the inability of Borrower,
or the admission in writing by Borrower of its inability to pay its
debts as they mature (the term "acquiescence" means the failure to
file a petition or motion in opposition to such petition or
proceeding or to vacate or discharge any order, judgment or decree
providing for such appointment within twenty (20) days after the
appointment of a receiver or trustee);
(f) Filing of an involuntary petition against Borrower in bankruptcy
or seeking reorganization, arrangement or readjustment of its debts
or for any other relief under any applicable bankruptcy act or law,
or under any other insolvency act or law, now or hereafter existing
and such petition remains undismissed or unanswered for a period of
thirty (30) days from such filing; or the involuntary appointment of
a receiver or trustee for Borrower for all or a substantial part of
its property and such appointment remains unvacated or unopposed for
a period of ten (10) days from such appointment; or the issuance of
a writ of attachment, execution or similar process against any
substantial part of the property of Borrower and such writ remains
unbended or undismissed for a period of ten (10) days from notice to
Borrower of its issuance;
(g) Final judgment for the payment of money in excess of One Hundred
Thousand ($100,000) shall be rendered against Borrower and the same
shall remain undischarged for a period of thirty (30) days, during
which execution shall not be effectively stayed;
COMMERCIAL LOAN AGREEMENT PAGE 21
<PAGE>
(h) Any substantial impairment of value, loss, damage or destruction
(not covered by insurance) of the Collateral occurs; or
(i) Lender shall reasonably and in good faith deem repayment or
performance of the Note or any of the Obligations to be insecure.
7.2 OPTIONAL ACCELERATION. Upon the occurrence of any Event of Default (as
defined in Section 7.1 above) set forth in Subsection 7.1(a), (b), (c), (d),
(g), (h), or (i), hereof, any obligation of Lender to make any further advances
of proceeds under the Loan to Borrower pursuant hereto shall immediately
terminate and the holder of the Note, at its option, without notice to any party
may declare the principal of and interest accrued on the Note to be forthwith
due and payable, whereupon the same shall become due and payable without any
presentment, demand, protest, notice of protest, notice of intention to
accelerate, notice of acceleration or notice of any kind (except notice required
pursuant to this Agreement or otherwise by law), all of which are hereby waived
by Borrower, on behalf of itself and all other sureties, endorsers and
guarantors of the Note.
7.3 AUTOMATIC ACCELERATION. Upon the occurrence of any Event of Default
(as defined in Section 7.1 above) set forth in Subsection 7.1, (e) or (f)
hereof, any obligation of Lender to make any further advances of proceeds under
the Loan shall automatically terminate and the principal of and interest accrued
on the Note shall be immediately and automatically due and payable without
notice or demand of any kind, and the same shall be due and payable immediately
without any presentment, acceleration, demand, protest, notice of acceleration,
notice of protest or notice of any kind (except notice required pursuant to this
Agreement or otherwise by law), all of which are hereby waived by Borrower, on
behalf of itself and all other sureties, endorsers and guarantors of the Note.
SECTION 8. MISCELLANEOUS.
8.1 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in
exercising, on the part of Lender, any right, power or privilege hereunder or in
any of the Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any of the Loan Documents preclude any other or further exercise thereof or the
exercise of any other right, power or privilege; nor shall any release of any
security for the repayment of the Loan, or release of any party primarily or
secondarily liable for the repayment of the Loan, or the grant by Lender of any
indulgence with respect to the Loan affect any other security for
COMMERCIAL LOAN AGREEMENT PAGE 22
<PAGE>
the Loan or the liability of any other party for the repayment of the Loan. The
rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law, or in any of the Loan Documents or in any
other agreement.
8.2 SURVIVAL OF AGREEMENTS. All agreements and covenants made herein shall
survive the delivery of the Loan Documents and the making and renewal thereof.
8.3 SUCCESSORS; ASSIGNABILITY. This Agreement shall be binding upon each
of the parties and their respective successors, permitted assigns, heirs and
legal representatives, and shall inure to the benefit of Lender and its
successors and assigns. Borrower's rights and benefits under this Agreement
shall not be assigned by Borrower without Lender's express prior written consent
and any attempted assignment without such consent by Lender shall be null and
void.
8.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
8.5 SEVERABILITY. In case any one or more of the provisions contained in
the Loan Documents or any other documents executed in connection therewith or
herewith should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not be affected in any way thereby.
8.6 INTEREST. It is the intention of Lender and Borrower to comply with
applicable usury laws; accordingly, it is agreed that, notwithstanding any
provisions to the contrary in the Loan Documents, or in any of the documents
securing payment thereof or otherwise relating thereto, in no event shall the
Loan Documents require the payment or permit the collection of interest, as
defined under applicable usury laws, in excessive the maximum amount permitted
by such laws. If any such excessive interest is contracted for, charged or
received under the Loan Documents, or under the terms of any of the documents
securing payment thereof or otherwise relating thereto, or if the maturity of
the indebtedness evidenced by the Note is accelerated in whole or in part, or in
the event that all or part of the principal of or interest on the Note shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received under the Loan Documents or under any of the
documents securing payment thereof or otherwise relating thereto, on the amount
of principal actually outstanding from time to time exceeds the amount allowable
under applicable usury laws, then in any such event: (a) the provisions of this
Section 8.6 shall govern and control; (b) neither Borrower nor any other Person
now or hereafter liable under the Loan
COMMERCIAL LOAN AGREEMENT PAGE 23
<PAGE>
Documents for the payment of the Note shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount of
interest permitted to be contracted for by, charged to or received from the
Person obligated thereon under applicable usury laws; (c) any such excess which
may have been collected either shall be applied as a credit against the then
unpaid principal amount on the Note or refunded to the Person paying the same,
at the noteholder's option; and (d) the effective rate of interest on the Note
shall be automatically reduced to the maximum lawful rate of interest permitted
under applicable usury laws as now or hereafter construed by the courts having
jurisdiction thereof.
8.7 EXPENSES; DOCUMENTARY TAXES. In further consideration to Lender
for the agreements herein made by Lender, Borrower will pay to or for the
account of Lender:
(a) within thirty (30) days after the end of each calendar quarter,
a fee on the Unused Portion of the Commitment Amount for the quarter then
ended equal to .15% per annum. This fee shall be calculated by multiplying
the Unused Portion by .15% by 90/360;
(b) upon the issuance of each Letter of Credit a issuance fee
equal to 1.0% of the face amount of the letter of credit;
(c) all out-of-pocket expenses of Lender (including reasonable fees,
expenses and disbursements of counsel for Lender) in connection with the
preparation, enforcement, operation and administration of the Loan
Documents or any waiver or amendment of any provision hereof;
(d) if an Event of Default occurs, all court costs and costs of
collection, including, without limitation, reasonable fees, expenses and
disbursements of counsel employed in connection with any and all
collection efforts; and
(e)Borrower agrees to indemnify Lender from and hold it harmless
against any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery by Borrower
of the Loan Documents and any documents executed in connection therewith.
8.8 NOTICES. All notices, requests and demands shall be given to or made
upon the respective parties shall be in writing and shall be deemed effective if
hand delivered, or if sent by United States certified or registered mail, return
receipt requested, postage prepaid, or if sent by private, receipted carrier
guaranteeing same-day or next-day delivery, addressed as follows:
COMMERCIAL LOAN AGREEMENT PAGE 24
<PAGE>
If to Borrower: Neutral Posture Ergonomics, Inc.
3904 N. Texas Avenue
Bryan, TX 77803
Attn: Gregory A. Katt, Chief Financial Officer
If to Lender: Compass Bank
2405 Texas Avenue South
College Station, TX 77840
Attn: Mr. Jerry Fox, City President
If sent by U.S. certified mail, in accordance with this Section 8.8, such
notices shall be deemed given and received on the earlier of (i) actual receipt
of the above specified address of the named addressee, or (ii) on the third
(3rd) business day after deposit with the United States Postal Service. Notice
given by any other means shall be deemed given and received only upon actual
receipt at the above specified address of the named addressee.
8.9 MERGER OF PRIOR REPRESENTATIONS. Borrower acknowledges and agrees that
it has not, in the execution of this Agreement or any of the other Loan
Documents, relied upon (and that it shall not be entitled to rely upon) any
representations or statements of Lender or any other party, whether written or
oral, made prior to the execution of this Agreement and the other Loan
Documents, other than any such statements or representations expressly set forth
in writing in this Agreement and the other Loan Documents; and that this
Agreement and the other Loan Documents represent all of the terms of the
agreements of Borrower and Lender in connection with the Loan.
8.10 CONTROLLING DOCUMENT. In the event of actual conflict among the terms
and provisions of the Loan Documents, the terms and provisions of this Agreement
will control.
8.11 AMENDMENT. This Agreement may not be amended except in writing signed
by Lender and Borrower.
8.12 DESCRIPTIVE HEADINGS. Descriptive headings of the several sections of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
8.13 GOVERNING LAW. The Loan Documents shall be governed by, construed and
interpreted in accordance with the laws of the State of Texas, except to the
extent that the federal laws of the United States of America may apply.
COMMERCIAL LOAN AGREEMENT PAGE 25
<PAGE>
8.14 ASSIGNABILITY; LIMITATIONS. Lender shall have the right to assign all
or any portion of the Loan Documents to any person or entity, without any prior
notice to the prior consent of Borrower.
8.15 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT, THE NOTE, THE OTHER LOAN
DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED HEREWITH, REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereunto have caused this Agreement to be
duly executed in College Station, Texas, as of the date first above mentioned.
LENDER:
COMPASS BANK,
a national banking association
By: /S/ JERRY E. FOX
JERRY E. FOX, City President
BORROWER:
NEUTRAL POSTURE ERGONOMICS, INC.,
a Texas corporation
By: /S/ REBECCA BOENIGK
REBECCA BOENIGK, Chairman and CEO
Exhibits:
"A" - Borrowing Base Certificate
"B" - July 31, 2000 Detailed Accounts Receivable Aging Report
"C" - July 31, 2000 Inventory Report
"D" - Form of Note
"E" - Borrower's issued and outstanding stock and holder's thereof
"F" - List of Corporation's Indebtedness
"G" - Existing Litigation
COMMERCIAL LOAN AGREEMENT PAGE 26
